Lord Howell of Guildford: My Lords, I hope that the Minister has a nice time in Vienna this afternoon. Does she recall—I am sure that she does—the Prime Minister saying in the Sun on 13 May:
	"We don't know what is going to happen in France, but we will have a referendum on the constitution in any event—and that is a government promise".
	Is that still a government promise? If so, if is there is a referendum on the current constitutional treaty, which side will the Government be on?

Lord Faulkner of Worcester: My Lords, I thank my noble friend for that encouraging reply. Is he aware that, had he conducted a search on eBay last night for Ashes tickets, he would have found that 170 items came up, including Lords test tickets with a face value of £52 being sold for more than £1,000? A very similar situation exists with regard to Wimbledon tennis tickets. Does he agree with the submission that the four major sports have made to the Secretary of State, that the activities of ticket touts—who buy large numbers of tickets, often by nefarious means—is having the effect of driving tickets beyond the reach of ordinary sports fans, who are unable to get them?

Lord Addington: My Lords, does the Minister have any sympathy with the idea that picking out a few individual sports is a great way to keep us sitting for longer and on more occasions? However, we should ban all ticket touting. We should also extend it to events other than simply sport. For instance, the annual scrum at Glastonbury usually leads to a fence collapsing. We should probably do something about that as well.

Lord Davies of Coity: My Lords, my noble friend Lord Faulkner of Worcester has rightly drawn our attention to the concern about the exorbitant prices being demanded for these tickets. As I understand it, my noble friend the Minister said that the Secretary of State is looking at the issue. I should like to ask him two questions arising from that. First, how long will that consideration take? Secondly, to what extent will the operation of the market impinge on his report?

Lord Davies of Oldham: My Lords, on my noble friend's second question, as I indicated, there are benefits from the free market. We are careful about where we put restrictions. However, noble Lords will recognise the powerful arguments for restricting ticket touting operations. On his first point, I should mention one obvious consideration. If we are successful in our bid for the Olympic Games, we would need to bring in legislation to ensure that tickets to the Games are restricted and thus not open to touting. It is a requirement of the International Olympic Committee. So of course there is an element of delay as we wait on that decision too.

Lord Davies of Oldham: My Lords, we expect the sporting organisations to sell tickets in good faith and that the price printed on the ticket is the price that ought to be paid by the person going to the fixture. But touts get hold of some of those tickets and sell them on at escalated prices. We all want to see tickets being sold at their face value. That is the law of the land. On occasions when they are able to substantiate clearly that the public are being exploited because tickets are being traded above the figure printed on them, trading standards officers will intervene. But of course what happens is that the touts are extremely careful to ensure that the unfortunate purchaser has no idea of the original ticket price.

Lord Roper: rose to call attention to current trends and developments in the euro; and to move for Papers.
	My Lords, I am moving this Motion on behalf of my noble friend Lord Dykes, and at his request.
	My noble friend's Motion calls attention to current trends and developments in the euro. He is, unfortunately, not well, but was most anxious yesterday when it became clear that he could not be here that, as a number of noble Lords had prepared for this debate, it should go ahead. I very much welcome the fact that the noble Baroness, Lady McDonagh, has chosen to make her maiden speech and we all much look forward to hearing her.
	I shall confine my remarks to setting out a number of issues which come within the scope of this Motion. My noble friend Lord Taverne will, I am sure, be able to treat them more fully when he replies from these Benches. Whatever one's view about British membership of the euro-zone, and I should make it clear at the outset that it is my ambition to see the United Kingdom become a member of the euro-zone, there must be few who would see it as an issue of the near future—although I shall return to that in my concluding remarks.
	Therefore, our debate today will, I suspect, turn on current trends and developments within the existing euro-zone and, perhaps, the growing role of the euro as a global currency. Inevitably, that will involve the reactions on the currency markets to the recent referendums and the evolution of the stability and growth pact, particularly as it was amended at the European Council in March this year. The debate will also, no doubt, touch on the issue of the durability of the monetary union, which is a situation that some commentators have raised since the referendums in France and the Netherlands.
	Public discussion during the referendum campaign in the Netherlands and since, in the analysis of the votes, has suggested that the unpopularity of the euro was a factor in the "No" vote. This seems to have turned on the feeling that the Netherlands had gone into the monetary union at the wrong rate and that particularly the larger member states had not taken the fiscal disciplines of the stability and growth pact seriously and that that had led to a modification of the stability and growth pact to their advantage. That behaviour of their larger neighbours was much resented in Holland and clearly influenced votes in that referendum.
	On the other hand, the euro does not appear to have played such a significant part in the French referendum, apart from, as in Italy, criticisms of its perceived inflationary impact. There seems to be a universal problem about the perceptions of euro-generated inflation, which, on the whole, seem to conflict with the reports and analyses produced by the national statistical administrations. Perhaps the noble Lord, Lord Peston, may say whether he knows of any reason why there should be such a difference between perceptions and the analysis on this critical topic.
	One outcome of the referendums, if they lead to the end of the constitutional treaty, is that the euro-group, the euro-zone's finance Ministers, will not be granted official status. Under the existing European law, although they meet, they can only do so in an informal capacity. The adoption of the constitutional treaty would have given them more authority to co-ordinate fiscal policy and might also have made their relationship with the European Central Bank clearer.
	Turning to the current state of the euro-zone, in recent weeks there has been a great deal of pessimistic analysis. I found the short analysis in the recent OECD Economic Outlook, published about a month ago, one of the more objective pieces of analysis on this subject. It is a useful starting place. It recognises that over the euro-zone as a whole—there are exceptions, of which Ireland is the best known, but Spain has also been having a significantly higher rate of economic growth—economic recovery has lost momentum since mid-2004 but it will probably resume in 2006. Economic growth, even when it was doing relatively well, was at 2 per cent across the euro-zone; it is expected to fall this year to 1.25 per cent before recovering to reach 2 per cent next year. The OECD goes on to say that this has led not merely to a negative output gap but, more seriously, unemployment across the euro-zone is more than 8.5 per cent. That is not a happy situation.
	In its policy prescriptions for the euro-zone, the OECD says that there is room to ease monetary policy. That has been picked up in the press. Some easing of the exchange rate towards the end of this year is now anticipated. More importantly, the OECD reported on the need to work on structural policies which should aim at completing the European internal market, boost labour market performance and encourage innovation. Those sound rather like some of the objectives of the British presidency of the European Union. Finally, the OECD recommends that the euro-zone's fiscal policy should be rooted in long-term sustainability.
	The durability of the monetary union has featured in a good deal of recent discussion. I do not intend to spend very much time on the Italian debate, except to say that it is restricted to one political party; I have been unable to find support from any Italian economist or banker. However, after recent events it would be rash to predict how a referendum on this topic would go in Italy. I share the view of the chief economist of the European Central Bank, Otmar Issing, who suggests that members who want to leave the euro-zone would be committing economic suicide. I was interested to see the recent remark of the very distinguished Nobel prize winner, Robert Mundell, who did a lot of the classical work which pre-dated the euro-zone. He said:
	"There is less chance that EMU will be disbanded than there is of a collapse of the dollar".
	On second thoughts, I was not quite sure that that was too reassuring a remark.
	The certainty of EMU's long-term survival is being questioned. That is in part because some of those who support EMU and its project of monetary union as well as a number of its opponents have long believed that there is an essential connection between a monetary union and a political union, and that it is impossible to have one without the other. The apparent failure of the constitutional treaty is taken by some as the end of progress to a political union and as a very serious warning for monetary union.
	Noble Lords will know the historical precedents and examples quoted from the nineteenth century to this century of monetary unions which have not continued in the absence of political union. However, although some advocates of political union have prayed this argument in aid, the alternative argument, maintained from the time of the Maastricht Treaty, is that the mechanism set out in that treaty, particularly the stability and growth pact, mean that there is no need for a political union to guarantee monetary union as long as three conditions prevail—fiscal discipline among the members of the union; Central Bank independence; and a reasonable degree of product and labour market flexibility.
	The problem that now leads to the discussion returning is that while no one would question the independence of the Central Bank, the other two conditions are by no means so clear cut. Even in the softer version, the stability and growth pact agreed by the European Council last March is still not providing fiscal discipline. The Commission has forecast that five of the 12 euro-zone members will breach the 3 per cent deficit to GDP ratio this year. I have not been able, at relatively short notice, to carry out a complete analysis, but I am told that there is very little sign that the larger member states have been in any way influenced in their behaviour by the fiscal rules set out in the stability and growth pact. That is somewhat ironic, given that some of them insisted on such a pact.
	Similarly, we know the difficulties that several of the larger members of the euro-zone have had in implementing economic reform, particularly in relation to the rigidities of their labour markets. Lack of progress in this area is sometimes obfuscated by ill defined references to a European social model. While much of the discussion on this concentrates on France, Germany and particularly Italy, we should not overlook the fact that Portugal and Greece, which receive a great deal less attention, are running the highest government budget deficits in the euro-zone.
	This situation does not lead to the inevitable demise of the project, but it suggests that both an acceptance of fiscal discipline by the members of the euro-zone and of the structural reforms referred to in the OECD Economic Outlook are required. At least in one respect, the policies for economic reform and a new attention to the Lisbon goals, which are closely related and were referred to in last night's speech by the Chancellor of the Exchequer and this morning's speech by the Prime Minister, suggest that the British presidency is aiming to take the whole of the European Union and, therefore, necessarily the members of the euro-zone, in the direction in which they need to go. I am not sure it was always realised what good friends the euro-zone had. The eternal optimist in me suggests that that might also bring forward the date of British entry into the euro-zone. I beg to move for Papers.

Lord Harrison: My Lords, I thank the noble Lord, Lord Roper, for that excellent introduction to the debate. I send our very best wishes to the noble Lord, Lord Dykes, whom I know will very much regret not being here today. I, too, look forward to the maiden speech of my noble friend Lady McDonagh.
	I shall confine my remarks more to the British view of what is happening about our attitude towards the euro. I start with a story of small change in Britain today. My wife and I recently visited the Blackburn Museum and Art Gallery, where we found the Robert Edward Hart collection of ancient coins. The first part was devoted to the history of British coins—the chequered past, leading eventually to the pound from the groat, the mark and other variations—to that imperfect single currency we still have in the United Kingdom. In England, we still refuse to accept Scottish or Northern Irish notes—the ones that do not have the Queen's head on them.
	The second part of Hart's collection was devoted to Roman and foreign coins. The Roman coins represented a single currency throughout the then Europe; it was very successful throughout Europe and in Britain.
	My wife and I then passed out of the Blackburn Art Gallery and went to have a cup of tea at the coffee shop outside. By mistake, I gave some small change, in euros, to the waitress. She pointed this out to me and I forked out the pennies that were needed, but the owner of the café came up to me and said, "Don't worry about that at all. I'm very familiar with euros. Indeed, I have a euro account". He said that he was a familiar visitor to the Continent and found it advisable to keep euros.
	I give this example of "small change" in British life because it is important to draw some parallels between the Roman Empire and now. The Roman Empire needed a single currency to facilitate the business of being a Roman road-builder; the business of being a centurion or a foot-soldier; or the business of being a wine merchant or a corn contractor. And so in modern Europe's single market, it is the euro which facilitates the business of being an entrepreneur; the business of being a small businessperson; the business of being a student; the business of being a tourist or a financier or, indeed, a construction engineer. We fail to say and repeat that the main task of a single currency is to reinforce the single European market. It is that which leads us to the wealth of nations about which Adam Smith would have been so pleased.
	But the small change in Britain is happening. If you go to the British Museum today, where there is another magnificent coin collection, you are asked at the door to contribute $5, €5 or £3. The wealth of nations is coming into the British Museum. If you go outside to communicate with a friend on the other side of the European Union, you can now do so in the euro-friendly telephone kiosks. This is another "small change" in British history.
	But it is not all small change. I have been interested to read that "the tectonic plates are beginning to move", which is a favourite phrase of the Deputy Leader in another place. I learn, for instance, that Barclays' 700 branches—doubtlessly one of them is in Blackburn—now lend in euros, especially to people who are buying in the main holiday and retirement areas in southern Europe. This change has been brought about by the low-cost airlines, which too have been fostered by the single European market—another success. Barclays lends in euros, whether or not you have an income expressed in euros. Susan Clay, the European business director of Barclays, says that £57 billion of equity was taken out of the UK property market in 2003, most of which was tied up in homes in southern Europe. That is no wonder with a mortgage repayment rate of around 3.4 per cent.
	The noble Lord, Lord Roper, is right that joining the euro is not necessarily on the agenda for the United Kingdom today. I have not checked whether the Chancellor reiterated his five reasons for saying "no in thunder" in his Mansion House speech last night. I will do so later today. Nevertheless, the United Kingdom must be ready for the task of preparing for a time when the euro will be embraced in this country. Is the Treasury still actively preparing the reports, industry by industry, to make sure that we will be ready should that call come and the ensuing referendum results in a "Yes" vote? I ask the Minister whether we are making the proper preparations for the tourism, leisure and travel industries in particular.
	I reiterate that the tectonic plates are moving. Will the Minister discuss the creation of the new G4, which threatens to replace the G7 and the G8, of which our own Prime Minister is shortly to take up the reins? The G4 comprises the four countries of principal currency unions – the dollar, the yen, the euro-zone and the renminbi. Indeed, in my discussions this week with the Chinese officials from the People's Republic, they told me that the G4 is beginning to operate. It is not surprising that the leaders of its currency unions, who want to speak to each other authoritatively, are now meeting to discuss these important issues. It will be a shame if the United Kingdom is excluded from this conversation.
	In our debate in this country, we must avoid the kind of debilitating Euroscepticism which has punctuated the debate too often in this House. From the moment when the euro and the single currency were first conceived, those gainsayers and "painsayers" have always said that the United Kingdom should not be interested in what is happening in the European Union and our euro-zone border. They have always portrayed Europe in one way or another as a basket case. It is interesting that whenever the euro and its predecessors have moved one way or the other against the dollar, it was somehow always the euro that was depreciating out of control. It was never the dollar that was depreciating. There was never a proper analysis of some of the difficulties that the dollar experiences.
	We must reject the association of the single currency with failure. The recent "No" votes by the Dutch and the French should not lead us to equate the difficulties surrounding the constitution with those of the euro. The euro is strong and continues to be strong.
	I draw noble Lords' attention to a very interesting confirmation of what I have just said. Is the euro in its last throes? According to that noted Eurosceptic, Roger Bootle, apparently it is not. In February, he wrote an article entitled, "Should The Euro Be The Reserve Currency?" which is a matter to which the noble Lord, Lord Roper, has already turned. Mr Bootle pointed out that there was a rumour that South Korea's central bank might consider taking euros to denominate some of its reserves. He wrote:
	"Euro financial markets are broad and deep, the currency is fully convertible, the financial system and its institutions are well-known and trusted and the euro-zone is politically stable (at least for now). Moreover, the euro-zone is about the same size as the US in the world economy and just as important in world trade".
	That seems to me to be a confirmation that the euro is here to stay.
	Indeed, we must not say that the current crisis in Europe is a currency crisis, but we should look at what has been reduced to a contest between this country and France. A new and different vision of Europe has been articulated today by the Prime Minister in the European Parliament. Surely the Prime Minister is right to lay emphasis on the Lisbon agenda and on the importance of Europe spending money on research and development, education and training, and less on the CAP. We in this Chamber and in the polity in Britain really ought to have a common view that it is the Lisbon agenda and the single market that produce the wealth of nations, and that the single currency reinforces that single market.
	Before I finish, there is one other area that I would like to tackle—the European Central Bank. When, 10 years ago, I was a Member of the European Parliament and sat on its monetary sub-committee, we had the task of interviewing and talking to the proposed central bank people, including Mr Lamfalusi, when he was appointed as the head of the European Monetary Institute, as well as Mr Duesenberg and Mr Trichet. We were always at pains to remind them that while price stability was the main objective of the future European Central Bank, there was latitude in the Maastricht Treaty, which said that providing that price stability was ensured, interest rates could be used to facilitate and improve the workings of the single market and to encourage and stimulate investment.
	I am not sure that that message has always been understood—although it has been well understood in the American Federal Reserve, whose statute says that price stability and recognition of employment conditions are part and parcel of what it needs to do. What we have done in this country with the MPC may be a very helpful model for the future. But we understood that the European Central Bank needed to establish price stability to get the kind of encomium that it got from Roger Bootle, which I read out.
	I conclude by saying that this is a hugely important issue, which may currently be on the back burner but which will return increasingly as small change accelerates into greater change in this country, with the advent of the euro not only as a reserve currency but as one that is used in the streets of this country. It may not be everyone's cup of tea, but in the end we will drink it.

Lord Biffen: My Lords, this debate is the third this week on Europe, and there is a seamless thread that connects them all. It is greatly to our advantage that we are discussing Europe to the extent that we have devoted ourselves to doing this week, and in a spirit which on the whole has reflected well on this House. It certainly contrasts with the nature of the discussions that took place on the Continent. It seemed to me that the Council meetings on the budget were a classic example of open disagreement openly arrived at, with on the whole a fair degree of ill will all round. I cannot say that that disposes me to believe that these supranational organisations are necessarily the best ways in which to promote fraternity among the nations of Europe. But doubtless we shall see how all these matters proceed.
	I was particularly impressed—I say deferentially—by the remarks made the other day by my noble friend Lord Lawson of Blaby. His tour d'horizon of the European situation was masterly and highly realistic. If I had to take a quote for my mini-sermon today, it would be his remark that,
	"the pause needs to be prolonged and the reflection profound".—[Official Report, 21/6/05; col. 1550.]
	It is one of the most difficult things for a politician to do nothing—to engage in masterly lethargy—yet in some ways that is a tempting prospect for the Prime Minister. But doubtless he feels under an imperative to use his term as president to bring to the European scene panache, vigour, intellectual conviction and all the other terrifying components of public life. It is almost as if he had been attending evening classes at the Chicago school of economics, because he has come with a programme which is really quite daunting in what it purports to do with regard to European public spending and spending on the common agricultural policy—in terms not merely of single payments but in what we spend on the environmental activities of agriculture and animal welfare.
	All that, ironically, has happened on the very day that the Commission produced its proposals for sugar, which is supposed to be part of the enhancing relationship between us and the third world, only to have it condemned by Oxfam as being unfair to the Caribbean and African sugar producers. But I leave that as part of the footnotes about which we will argue in the coming time.
	However, I wish my Prime Minister every success—I do not like seeing him being savaged by the wrath of Luxembourg. This country deserves to be treated with proper respect and regard. But a period of inactivity would be just as well as a period of activity that could be seen only as us presenting our market view of Europe against the social programme of the French. I take no part in adjudicating which is the superior; all I say is that each country can make its own judgment, having regard to its own national character and heritage. When I hear the noble Lord, Lord Harrison, refer generously to Adam Smith, I realise that there is a bond that unites us that is quite independent of our own politics.
	The period of presidency is limited to six months, and—perhaps understandably—the Prime Minister comes to it with the excitement almost of a born-again John Kennedy, and his 100 days of vigorous action. I hope that we survive it without too much damage, and that perhaps he will be able to secure certain reforms and directions. But I shall tell your Lordships the reform that I would most welcome is to concentrate on how we could disaggregate the European partnership so that more and more it related to national decisions, reacting to national circumstances and national inheritance, and less and less trying to put on us a continental imprint.
	I do not regard that opinion as in any sense reactionary—or, dare I use the word, Euro-sceptic, which is now treated like an outbreak of smallpox. As was argued on Tuesday—not by noble Lords from a Euro-sceptic viewpoint, but from the point of view of Members of this House who have established great European reputations—it is a matter of taking the Lisbon agenda as being more appropriate for the national decision processes, rather than being elevated into an aspect of European policy.
	I turn to the very item of today's discussions. I must say how much I appreciate the fact that the Liberal Party has chosen this as a topic, as it rounds off our Euro week. I am very sorry that the noble Lord, Lord Dykes, could not be here to deliver his speech, because I believe that I could truthfully say that of all the Members sitting on the Liberal Benches, he is the one most committed to the concept of a European currency, with all the rigours and fixed rates that that implies. But I welcomed the scholarly analysis made by the noble Lord, Lord Roper.
	I shall make three fairly simple points about the currency arrangements and the euro, not from the point of view of someone drawing on economic prejudices but from that of a street politician. The first point is that the euro-zone has very considerable difficulties; I do not believe that one is being unduly partisan to observe that. Those difficulties are represented by the way in which the stabilisation pact must be redrawn and is argued about and disregarded. I am reminded powerfully of an article written not that long ago by the noble Lord, Lord Rees-Mogg, in which he said that, at the end of the day, whatever may be the formal banking constraints, domestic politics will triumph—and domestic politics is showing a pretty good sense of durability.
	Whatever will be the success of the euro-zone at the end of the day will depend upon the success of the national governments who comprise the euro-zone in conducting their public spending, borrowing, taxation and the like in a way that is responsible and that is consistent with what are the assumed objectives of policy, and upon their not retreating into rhetoric as an alternative to action. I say that in no sense of hostility to the euro-zone. However, I am puzzled by the whole formula of the stabilisation pact, particularly when my noble and learned friend Lord Howe said in Tuesday's debate:
	"Nor . . . is the Stability and Growth Pact an agenda for the Union, because it simply spells out the implications of economic sanity, which the markets will in the end enforce come what may".—[Official Report, 21/6/05; col. 1559.]
	I must say if that were a really compelling analysis of the situation—I find it rather elliptical—I wonder what the governments in all these countries are doing if it is all going to happen anyway and they have only to sit on their hands, or perhaps because of their inability to sit on their hands these difficulties are now arising. All I can say is that I have no hostility to the euro-zone.
	However, that takes me to my second point which is that I have no desire to see this country within the euro-zone. We have now had a period of experience. Like Abbé Sieyès, we may say at the end of it, "J'ai vecu". We have survived. Here we are. We have our sterling. We are running our own policy, which is controversial. I happen to think that there is an overemphasis on government borrowing, certainly when it is coupled with high levels of private borrowing. None the less we have a formula that has enabled the establishment of a relationship between the Bank of England and the politician. I believe that is enviable. We have been immensely well served by the noble Lord, Lord George, and, currently, by Mervyn King. I admire the way in which the Chancellor has been able to use the relationship in a way that stands us in good stead. I am not sure whether that will always be the case. It will possibly be undermined by unwise political decisions. That is for the future. Here and now I see absolutely no reason to surrender an institution which, so far as I can see, affects beneficially the conduct of policy. When I hear talk of linking together all these things to promote the establishment of a master European currency, which by its very existence will bring about greater prosperity, I believe that we have lost the powers of analysis to the powers of an almost religious assertion.
	That brings me to my final point; that is, the vogue for having a single currency is closely related to the idea that a European Union must have a single market. It may have an aspiration to a single market but the pursuit of a single market is leading us into an immense web of bureaucracy, complexity and disillusion. The very aspiration is so gargantuan that it should cause us to check and to reflect on whether that is proceeding in the right direction, and above all, proceeding in the right direction when we are looking forward to the day when Turkey and the Ukraine will be in the wider Europe. All this leads me to think that what we need is a recrudescence of—I recall this cheerfully—the days when Harold Wilson as a domestic trade Minister said that he wanted a bonfire of controls. What we need is to look at the acquis. The acquis is so immense that War and Peace looks like a pocket dictionary compared with it.
	There is an overwhelming desire to go back to first principles and to say that we accept movement and flexibility as regards currency but because we disavow the desire to have one single fixed currency we are relieved of some of the more absurd ambitions of the single market. Unless and until we do that, we shall always be struggling in the difficulty in which there is an appalling gap between private instinct and views and public policy. That gap can exist perhaps for decades but sooner or later it will all end in tears.

Baroness McDonagh: My Lords, I welcome the opportunity to speak for the first time in the House. I understand that it is customary in one's maiden speech to say how warm and welcoming the House is. However, I think I took that reputation a little too literally. Soon after I was introduced I entered the Chamber on my second day and cast around for somewhere to sit. I saw no one on the Labour Benches who I recognised. Sensing my rising panic, the right reverend Prelates on the Bishops' Benches smiled at me with encouragement. I mistook that for an invitation to sit with them. No sooner had I sat down than they all rose to their feet with a speed of which I did not think them capable.
	Clearly, the Church of England in recent years has undergone much modernisation, but I think that a woman Bishop, certainly of the Catholic variety, was a step too far. However, I am sure all noble Lords will want to join me in congratulating them on the recent appointment of John Sentamu as the new Archbishop of York. We wish him well in his mission.
	It is a great honour for me to serve in this House. For nearly all my adult life I have worked at the other end of politics, trying to make the Labour Party electable and then to get it elected. My ambition went no further than wanting to see Labour win and then be re-elected for a second term. I cannot tell noble Lords how pleased I am that that narrow ambition has now been surpassed.
	Before I entered this House I was General Secretary of the Labour Party. Now that I have arrived in this House I am pleased to see that I am not alone. Indeed, with the noble Lords, Lord Whitty, Lord Sawyer and Lord Triesman, on these same Benches, I am somewhat concerned that now that we have replaced hereditary peerages, ex-general secretaries of the Labour Party now form the largest grouping.
	I am also pleased that my sister is here today to witness my first speech. She comes from another place. I should like to tell noble Lords that that is something our parents have known all along. It was a great thrill for me to see her first elected in 1997 and then re-elected in 2001 and 2005. I was recently told that this is the first time that two sisters have sat in each House respectively. We both believe that this has nothing to do with our talents but has a great deal to do with the progressive policies of the Labour Party in increasing the number of women representatives. We consider that that has enhanced public policy making in recent years.
	As noble Lords will know by now, I am very proud of the Labour Party—a party I joined while still at school—and of what the Labour Government have achieved in the past eight years: economic efficiency coupled with social justice. I am sure that noble Lords on all sides of the House agree that economic stability, low inflation, low interest rates, decreasing unemployment and rising standards in schools are all great achievements. However, one common theme in all these achievements is that they match the concerns of those we seek to serve. What we discuss in these Houses is what the public discuss at home. Unfortunately, that cannot be said for our European institutions. They seem to be unresponsive to public opinion and to speak a language that is not understood by the public in any of the member states.
	I am proud to call myself a European; the vision of the EU is one with which I strongly agree. We all understand that with globalisation we rely on one another more than at any time in our history. But before you can begin to rely on any individual organisation or institution, you must be able to trust them and to have confidence in them. To make the decision about whether we can do that, we all have shortcuts. We ask ourselves—how will they react at times of crises? Do they run from difficult decisions? Will they reform and modernise if required? The public, not just in our country but recently also in France and the Netherlands, have come to the conclusion that the EU is not ready to take difficult decisions. Its failure to find a permanent European Parliament in one city is just one decision that it has failed to make. Consequently, trust in the euro and in Europe in general is now at a low ebb. Those are the symptoms, not the cause of the problem. For example, the problem of high unemployment in many member states is not the euro, but it is failure to reform.
	The euro was introduced at a time and in economic circumstances that were not appropriate for Britain. That is why we chose not to enter in the first phase. I believe that was the right decision by the Government, and I also believe that the test of when and whether we join the euro are right. I know that they will be applied rigorously by the Government. That is the minimum of what is expected of us by hardworking families, whose lives we know we can hurt if we make the wrong decision. As Pope Pius XI said:
	"Economic power is headstrong and vehement, and if it is to prove beneficial to mankind it must be securely curbed and regulated with prudence".
	I thank noble Lords for this opportunity to speak, and I look forward to participating in future debates.

Lord Rees-Mogg: My Lords, it is a great pleasure to have the opportunity to congratulate the noble Baroness, Lady McDonagh, on a distinguished maiden speech. She was careful in managing to avoid undue controversy. She quite properly paid tribute to her past work for the Labour Party, which has been a devotion of her life. She is one of a distinguished group of former General Secretaries of the Labour Party. I felt almost that rising immediately after her I ought to have held that post myself.

Noble Lords: Oh!

Lord Rees-Mogg: My Lords, the noble Baroness also had a distinguished career in Fleet Street, and there perhaps I feel rather closer to her. I notice that the lawyers in this House often hang together, and I think that the newspaper people ought to hang together as well. At any rate, we look forward very much to more speeches from her.
	This has been an interesting and excellent debate. I join all other noble Lords who have expressed their regret that the noble Lord, Lord Dykes, was not able to be present. I wish that he will get well as soon as possible. I thank the noble Lord, Lord Roper, for taking his place and for putting a moderate and balanced case, from the point of view of the Liberal Democrats, on how they see the euro in its present stage.
	The noble Lord was right to concentrate a part of his speech on what seems to me to be the real intellectual question behind this debate. That question is whether in fact it is possible to have a single currency, and make that single currency work over time, unless you have a single government. Certainly the dollar, which is a currency that despite considerable vicissitudes has lasted well over a couple of hundred years, has been dependent on the strength of the federal government and on the strength of the Federal Reserve board for the stability that has on the whole been maintained. The United Kingdom has had a single currency over the whole of the United Kingdom, which has been dependent on government action and action by the Bank of England that have enabled it to be successful.
	It is rather harder to find in the history of currencies single currencies that have lasted for more than a generation or so—a generation is not terribly long in the history of a currency—without having that basic backing of a single government. It is certainly apparent now that the resistance in Europe as we saw in the referendums in France and the Netherlands to the development of a single European government are much greater than they were. We are not, as many people on both sides of the argument thought, moving inevitably towards a united states of Europe. I do not think that project is dead or killed; there are still important forces in Europe that would like to move in that direction, but the inevitability has gone.
	That seems to be the central question that must be faced; all the more because of the apparent breakdown of the stability and growth pact. It really is very serious that the condition that was put in in order to protect the euro—the single currency—against the mismanagement of their own finances by the individual governments of the euro-zone has not been honoured by two or three of the largest and most important governments of the euro-zone. There is a real danger that the rising budget deficits of several euro-zone countries will cause financial problems of a serious kind and also a decline in confidence in the currency. That is obviously a negative point.
	Perhaps we need most to examine the case of Italy. Italy has a long record of running its financial affairs so as to incur as a consequence of over-expenditure—too large deficits—a succession of devaluations. That is really the currency history of Italy throughout the late 19th century and certainly the whole of the 20th century. They took the opportunity when Britain left the exchange rate mechanism to have another, and so far final, devaluation of the lira. Italy does not have that sort of stoic fortitude that enables some countries, including particularly Germany, to maintain a really strong currency over at least a generation or two.
	The figures for the deterioration of the bilateral economic relationship between Germany and Italy in the past 10 years are really quite astonishing. The Germans, with immense self-discipline, have managed to reduce the unit cost of labour by slightly over 1 per cent over the past 10 years. They have had absolute stability, with a slight trend downwards.
	Italy's unit labour cost figures have risen by 38.7 per cent in the same 10 years. That means that there has been a deterioration of no less than 40 per cent in the bilateral trading relationship in terms of labour costs between Italy and Germany since 1995, which is the relevant period. In theory, Italy could put that right by squeezing its own economy, having a major deflation and forcing prices and costs down. However, that is not at all likely. Italy has no tradition of doing that; its tradition is one of devaluation. It already has unemployment at about 11 per cent.
	However, the rise of Italian costs inside what is essentially, although not totally, a fixed currency rather than a floating currency has produced a crisis in, for instance, Italian textile exports, which are not competitive with those of Asia. It has produced another crisis in terms of Fiat, Italy's largest automobile company. General Motors paid $1 billion not to be required to carry out its obligation under contract to buy Fiat, which means that, from the point of view of General Motors, Fiat was worth minus $1 billion to avoid taking on that responsibility. In May, Fiat sales were down no less than 23 per cent on sales in May the previous year.
	In that situation, it is not surprising that a government who have done extremely badly in the regional elections because of basic resentment about the country's economy should have at least one of its coalition partners advocate a withdrawal from the euro and a return to the lira. No doubt that would be followed by one of the lira devaluations with which we used to be so familiar.
	Italy's problem is that it needs a major economic adjustment. In the old days, it used to make such economic adjustments through adjusting the currency downwards. Desirably or undesirably, that is how it did it. The only other way to do it is to squeeze the economy. Italy does not have the political consent of its own people to squeeze its economy in that way and push unemployment up further. It would lead to the government being inevitably expelled from office.
	Italy has been caught by what the critics of the single European currency always said was the problem—that you could have a major European nation inside the euro in circumstances in which it needed to make a major adjustment to its economy, and where that adjustment naturally meant a devaluation and devaluation was impossible, but that the people were prepared neither to put up with the suffering required to make the adjustment nor politically to continue with the situation in which they found themselves.
	A considerable number of further difficulties arise. One is the Italian bond market, and the way in which it is possible to speculate against the continued existence of the euro not in the currency itself, but in the Eurobonds issued by different countries. A growing speculation is now in favour of German-denominated Eurobonds and against Italian, Greek and Portuguese-denominated ones. You have the risk of a speculation similar to that suffered by the pound from Mr Soros 13 years ago. I do not believe that that will happen very fast, but it is not true to say that it is not possible for the market itself to start to put pressure on the future of the euro.
	The problem is not new. Not many of us are here today, and perhaps we share a fascination for the intellectual history of currencies. The great episode in this country—it led to a single currency not supported by a single government breaking up—was of course the return to the gold standard in 1925, and its abandonment by the Ramsay Macdonald government in 1931. You can have a currency with great authority behind it, which the euro to some extent still has. However, if you get into a situation in which the economics and the politics make it impossible to continue, a government can wake up and find that they have no recourse but to leave that currency. The British government did that in 1931. An Italian government may find themselves forced to do that and leave the euro at some point in the coming years.

Lord Peston: My Lords, setting up the European monetary system is the greatest economic achievement of the European Union. As a currency union comprising 12 countries and a population of 300 million, and in the process of becoming larger still, it represents a remarkable step forward in economic integration. Much to my regret, although I understand why, we were not in at the beginning and have engaged in continuous sniping since. As kibitzers, we should not wonder that the real players do not take us seriously at all. Certainly if there are aspects of the euro area that we do not like—there are several—we have only ourselves to blame. I shall not go over the "I told you so" stuff connected with the CAP as well, but it is the same story written over a much longer period.
	In that sense, I congratulate the noble Lord, Lord Dykes, on winning the ballot and choosing the subject. Like all noble Lords, I hope that he will make a quick recovery from illness. I also thank the noble Lord, Lord Roper, for introducing the debate. Having said that, deep down I believe that we are wasting our time. It is apparent that the Government will not join the EMS over any realistic time horizon—by which I mean my life expectancy. The Official Opposition seem to be content to stay precisely that for at least the same length of time. Even if eventually—goodness knows how long "eventually" is for them these days—they did become the government one day, they too say that they would not join monetary union. For those of us who wish to see our country at the heart of Europe, that is all deeply saddening.
	That is especially so if we accept what the noble Lord, Lord Lawson, said on Tuesday; I apologise to him as he leaves. It must be difficult for him to be congratulated from both sides of the House, but he said that the rationale of the European project had always been political, not economic. I agree totally. The reason that, in a sense, our economic analysis in the debate is somewhat irrelevant is precisely because we do not follow his correct dictum that we really ought to discuss the politics, not the economics. Having said all that, and having said that we are wasting our time, I have another two and a half pages of notes and naturally I have no intention of not reading them. I want therefore to look at the achievements. Inflation has been kept low and stable, which is the primary function of the ECB. Exchange rates between member countries have, ex definitione, ceased to vary. The external value of the euro has obviously varied, notably against the dollar. But even after the recent fiasco on the referendums on the new constitution, the euro has not weakened to any great degree.
	The overall balance of payments in the euro-zone is in surplus largely due to the enormous surpluses of Germany and France. Short-term interest rates in the euro-zone are lower than in other countries and have been falling. An even more important point that we should not ignore is that capital markets have become much more integrated and will continue to do so.
	However, more important than any of those issues is that at the simplest level the single currency has been a success; namely, it has worked in precisely the way a currency is supposed to work. It operates with no difficulty whatever as a medium of exchange or as a store of value—precisely what Adam Smith would have said was the real pre-requisite for judging this situation. Bearing in mind all the prophets of doom, we should not ignore how amazingly, straightforwardly and simply it was introduced and has worked.
	I must admit that even though I was in favour, I expected infinitely more difficulties. The so-called Europhobes, who want a free-trade area rather than a European Union, should understand that a common currency is a vital prerequisite for an efficient system of free trade. It provides exactly what is needed; namely, financial stability. And, for the more profligate, it prevents the easy but only temporary way out of economic difficulties; namely, it stops you inflating your way out of trouble and it stops you devaluing out of trouble.
	In that connection, I am astonished that Italy, of all countries, should have any leading public figure saying that it would be better off outside monetary union. It would be idiotic, indeed insane, for the Italians to believe that they would be better off if they left the euro. Referring to what was said by the noble Lord, Lord Rees-Mogg, I can assume only that whichever Italian would say that must literally have forgotten the mess symbolised by the behaviour of the lira over many decades. Many of us who in our younger days travelled to Italy could never remember what the lira was worth from day to day, let alone over any reasonable period. If one country is going to gain by not pursuing the path of unsound public finance and an unwillingness to address the real problems which the noble Lord, Lord Rees-Mogg, rightly pointed out, it is Italy.
	Before coming to the problems of the European monetary system, let me add that I am not one of those who believes that the evidence supports the proposition that the introduction of the euro has led to a rise in average prices. Even if one or two economists believe that, the numbers we are talking about are small indeed. But the euro has one other marvellous function: it provides a convenient whipping boy for anyone who wants to allocate blame for whatever is going on in the economy—notably the odd price change and so forth. It reminds me very much of the early days of decimalisation when any price increase, whatever the true cause, always attracted the comment, "We should never have decimalised".
	Referring to an earlier remark on the exchange rate, I wish that critics would make up their minds whether the problem with the euro is that it is too strong or too weak. Perhaps their position is that whatever its value, it is wrong. That is a state of economics that even I do not have the imagination to work through.
	What are the true problems of the European monetary system? The obvious one is the difficulty of adjustments in nominal wages. If overall inflation and public finances are held in control, short of a productivity miracle, which is pie in the sky in practice, excessive wage rises must lead to greater unemployment and recession. There is no way around that. On the supply side, goods and services cannot be sold profitably and on the demand side prices will rise to some extent so demand will fall, too. Clearly, one has to face the wage or the unemployment and recession problem.
	Secondly, even without wage pressure, competition, not least that deriving from productivity differentials both at home and abroad, also necessitates structural adjustment. Labour mobility between industries and their locations has to increase, even though it may lead to disruption in people's lives. In addition, however, retraining and the acquisition of new skills must become the norm.
	But there is nothing special about euro-zones. Taking the Longbridge example, if we cannot produce decent cars at a profitable price, unfortunately, a particular industry and the demand for the skills of decent people diminishes. The response to that is not to devalue and also, in my judgment, not to throw skilled men and women on the scrap heap and to pay them social security indefinitely. It is precisely to do what Italy and everyone else needs to do—we have to retrain and guide people towards new forms of work. In other words, structural adjustment becomes of the essence. Furthermore, even though we need to look carefully at the whole public finance structure and the nature of the stability and growth pact, whatever you do about it, you do not get away from the problem of structural adjustment. There really is no easy way out.
	My last such comment, before making one or two slightly controversial remarks, concerns the behaviour of the ECB. Here I echo some of the remarks of my noble friend Lady McDonagh. If we are to learn one lesson from the EU constitution mess, it is that we live in a world where ordinary people expect to be taken seriously. They no longer accept that something is right because this or that great figure says so. The ECB, whose head is a person of outstanding merit, does too little to take into its confidence the people it is meant to serve. It still wishes to retain the aura of a traditional central bank, with its emphasis on secrecy.
	That was particularly true when, according to the Financial Times, M. Trichet refused to say whether they even considered thinking about an interest rate adjustment. It reminds me—and one or two noble Lords present will also remember—of when in the 1960s Harold Wilson issued a diktat that no one in the Treasury was supposed to admit that any thought had been given to devaluation. If asked, they said, "No, we never discuss that sort of thing". I was very young then, but a number of people rang me and the only subject they wanted to discuss was devaluation. Therefore, I would have thought that Harold Wilson had failed in that. The idea you can pretend that delicate, sensitive matters are not debated and therefore you will not talk about them is preposterous.
	I conclude as I began. The construction of the euro area has been a great achievement. One or two Members in the debate on Tuesday used phrases such as "failure of the euro" or "the currency has not worked". That is preposterous: the euro is not remotely near to being a failure and, importantly, it has worked infinitely better than any of us would have anticipated. Full success requires many more economic reforms and, in my judgment, it requires full UK participation.

Lord Taverne: My Lords, I echo the remarks made by others who have referred to the great pleasure of listening to the maiden speech of the noble Baroness, Lady McDonagh. It was a charming speech and she made a number of extremely important points.
	I also echo the regret that my noble friend Lord Dykes was not able to introduce the debate. Instead, we had a very good introduction to the issues from my noble friend Lord Roper. It has been very useful to have a discussion of the euro as the last in the series of debates this week on Europe.
	I believe it is generally agreed that, at this moment, the euro-zone faces a number of very serious problems, which are of considerable concern to us. I am glad that those who have questioned the euro and its advantages in the past have not gloated about its present predicament. The success and prosperity of the euro-zone is of very great importance to us, even if we stay outside it. It is our biggest market. We have always been strong champions of the enlargement of the European Union, and there is no doubt that what attracted the new members to the euro-zone, and continues to attract other states to apply for membership, is not only the attractions of political security, but also the strength and stability that the European Union has presented, with the core constituted by the euro-zone. Those states would also be greatly affected if the present malaise turned into a serious crisis.
	It is perhaps suitable that we should look back at the history, the successes, the failures or the disappointments of the euro-zone in the past six or seven years since its formation. There have certainly been gains, as the noble Lord, Lord Peston, has pointed out, but, make no bones about it, there have also been considerable disappointments. The noble Lord, Lord Rees-Mogg, rightly focused the argument on whether a monetary union requires a political union.
	The view of the Bundesbank, as well as that of the noble Lord, Lord Rees-Mogg, and a number of other commentators, has always been that one needed a political union to secure the long-term viability of monetary union. That was the argument not only of the Bundesbank, but also of Germany. That view may still be held as necessary, but I believe that the idea of a political union is more or less dead. The noble Baroness, Lady McDonagh, was quite right in saying that that requires a degree of trust and confidence in the institutions which simply does not exist. National agendas have been pursued, which shows that, at the moment, there is no public support for a political union of Europe.
	It has also been argued by another school of thought—for example, by the very eminent economist of the European Central Bank, Otmar Issing—that monetary union is not required. One requires the co-ordination of fiscal and monetary policy, but that can be achieved without political union. As my noble friend Lord Roper pointed out, it requires three factors: the independence of the central bank, which we have; fiscal discipline; and labour and product market flexibility.
	An interesting and critical view of the record of the European monetary union has been undertaken by the Centre for European Policy Studies, in which some very important questions were raised by a number of eminent economists, including M. Daniel Gros. First, there is the performance of the central bank. I do not necessarily agree with the noble Lord, Lord Peston—with whom I normally agree—that that has been defective. It has maintained stability and low inflation and in those respects it has been a signal success. Whether it should ease monetary policy at present is, to some extent, a moot point. I agree with the report from the OECD that some easing is now required, but if it took a very relaxed view of monetary easing, that could endanger the view of the Union as such. I do not believe that the ECB is responsible for the present difficulties of the European Union.
	The second requirement is fiscal discipline, hence the stability and growth pact which, of course, has been abandoned. In the situation in which we found ourselves, it was inevitable that the strict rules originally required for the stability and growth pact would be relaxed. To insist on rigorous fines for any excess over the 3 per cent limit would be quite inappropriate in the circumstances in which Germany, France and others may find themselves.
	However, there was a lack of fiscal discipline. The snag was that that lack of fiscal discipline was evident at the top of the economic cycle when there should have been discipline and in fact attitudes were lax. National policies—often narrow, mistaken national policies—were followed. It has been argued that one did not need the stability and growth pact because the discipline of the market would have been sufficient. The discipline of the market is important, but it was not just national interest that should have been considered.
	Within the euro-zone everyone stood to gain from a policy that also took account of the interests of the euro-zone as a whole, and unfortunately that was not evident. The result has been, as the CEPS study has pointed out, that instead of having the convergence of economies that one expected inside the European Union, one of the disappointments of the past six or seven years has been that the economies have diverged.
	As the noble Lord, Lord Rees-Mogg, pointed out, the most signal case is that of Italy. Not only has there been a very considerable rise in unit labour costs, but Italy's real exchange rate has risen since the monetary union started by some 15 per cent.
	I do not take the view of the noble Lord, Lord Rees-Mogg, who says that this is a basket case that will never correct itself. Of course, action will have to be taken, but in the past Italy has taken some very courageous steps. One should not forget the very important Amato and Dini reform of pensions, which will take a long time to work through. That was brave, courageous and very realistic. One cannot say that this is a basket case. It would be extraordinary if Italy were to leave the Union because that would be the worst possible case for the future well-being of Italy. The effect on government bonds would be absolutely disastrous.
	As my noble friend Lord Roper pointed out, the third element in the Otmar prescription, as it were—indeed, the general requirements of a monetary union if one does not have political union—is the flexibility of labour markets above all, as the noble Lord, Lord Peston, said.
	One has to admit that so far the Lisbon agenda has failed. As the noble Lord, Lord Lawson, and others pointed out yesterday, essentially that is a domestic agenda. Its failure would have had an unfortunate effect on the economies of the euro-zone countries if there had been no euro. In fact, it is very doubtful whether any of the euro countries would be in a better position today if there had been no euro. There might not have been fiscal stability, but all the failures to adapt the structural reforms that are required were no more likely to have happened outside the euro than within the euro. There have been national failures.
	One has seen a certain element of protectionism in Germany with its requirement for high minimum wages to keep out foreign labour and in France with the rejection of the financial services directive, objection to open borders and continuation of certain subsidies. As Robert Mundell pointed out, a collapse of the European Union is not likely, unless there is runaway inflation, in which case the low inflation countries, such as Germany, might wish to be part of it no longer. I do not believe we are likely to see that.
	One should also not forget that Ireland is one country that has prospered enormously inside the monetary union. I do not believe that any members of the Irish Government would wish to leave the monetary union because of the troubles that it has had. Spain has prospered in the monetary union. The troubles of those who are not members of the monetary union are not due to the high interest rates, because historically the interest rates that Germany now faces are no higher than it has faced in the past. The answer lies with the OECD agenda, but we should bear certain things in mind when we may be tempted to turn to the European Union and say that if only it had followed our prescriptions it would be in a much better state and when come to the conclusion, as is now reasonable, that this is not the moment that we should join, it is an academic question in any event.
	We should not forget the points made by the noble Lords, Lord Harrison and Lord Peston. The first is that the euro reinforces the single market. The noble Lord, Lord Biffen, apparently accepts the logic that the euro is a very important part of the idea of a single market. But, rather surprisingly, he seemed to reject the single market. He said that it was an impossible aim and if one tried to achieve it one would have a plethora of regulations that we must abandon. I thought that it was generally accepted in this country that the single market has been of enormous benefit to our economy and trade. I agree with the argument that there is a logic about a single currency and a single market. That is one of the reasons why the last thing we should do is rule it out. Free trade is furthered by a single market. One only has to compare the degree of the non-domestic trade of countries within the euro-zone with the degree of the non-domestic trade of Canada within the free trade zone of north America.
	The second point made by the noble Lord, Lord Harrison, was that the current crisis is not a currency crisis, and I have made that point myself. It is the failure of the Lisbon agenda, that is, a failure of domestic action.
	The third important point is that in the course of the next few years important decisions will be taken by the euro-zone to deal with the problems that it now faces. They will be important decisions that will affect us as well as the members of the euro-zone. We will be completely excluded from those decisions. We should not forget that one of the important arguments for being a member of the euro-zone is that we would then have political influence and that our political influence inside Europe as a whole is diminished while we remain outside the inner group.

Lord Howell of Guildford: My Lords, like other noble Lords, I am extremely sorry to hear about the illness of the noble Lord, Lord Dykes. I hope that he recovers soon. I am very grateful to the noble Lord, Lord Roper, for giving us the chance for this short debate. I would go further and say that I thought his speech was admirably realistic, as the noble Lord, Lord Rees-Mogg, said.
	I derive faint amusement from the fact that it seems now that we have all become what were called "Euro-realists". Even the Chancellor has joined the group, although—this is a superb touch—it turns out that although he is saying exactly the same thing as many of us have said for many years, when he says it, it is now called "pro-Europe realism". It is a truly Mandelsonian touch: saying what everyone else has long been saying and pointing out but giving it a special branding. I do not care what they call it or what label they put on the jar. If we are going to have European realism at last, it is extremely welcome.
	The euro, which we are here to discuss, has been paying the price for all the political bickering. It has dropped a sharp number of cents in recent days from its very high level. That was what the noble Baroness, Lady McDonagh, pointed out in her excellent maiden speech, which was commendably brief, marvellously well focused and thoroughly enjoyable. I congratulate her on it. If the Euro-constitution has capsized—I think it has sunk, though some bits of it will be salvaged—are we allowed to ask whether the same fate could happen to the Euro-currency? I am reassured by the noble Lord, Lord Peston, that, despite the efforts of Harold Wilson, they went on discussing devaluation in the Treasury in his day. So perhaps it is a permissible discussion even though, obviously, one must handle it in careful terms.
	Before the whole idea is dismissed as unthinkable, it has to be remembered—as the noble Lord, Lord Peston, also pointed out—that the euro was originally introduced not as a monetary scheme but as a political one. It was depicted—there are many quotations to support this—as a giant step forward towards political union in Europe and towards the emergence of one integrated European bloc that would be a rival to the almighty dollar and to American hegemony. All this was said a hundred times and all this will be pointed out a hundred times. The euro was, and remains, a political construction.
	As I recall it, from the start—and I was one of two English representatives on Giscard d'Estaing's committee for monetary union—there were going to be three pillars. The first was monetary cohesion, which was to be provided by the European Central Bank. The second was budgetary and fiscal solidarity, which in the first phase was to be provided by the so-called "stability pact", rechristened "the stability and growth pact". The third pillar was to be the eventual political cohesion and integration of the EU member states, with the implication of a single government of sorts, as the noble Lord, Lord Rees-Mogg, also pointed out.
	The first pillar remains in place. We have discussed the European Central Bank. It has a difficult task, but it is very much in action and it is operative. The second pillar, of course, has crumbled, as several noble Lords have pointed out. Budgetary discipline has been abandoned in Italy and could well be discarded in Germany itself. It is obvious that several states in the zone find it intolerable that their public spending, and the borrowing necessary to finance it, should be limited by rules which seem to them unnecessary, onerous or just plain politically embarrassing or impossible to sell to their electorates. New and much laxer rules for budgetary limits within euro-zone states have now been devised with conditions which seem to be so extensive that they allow almost any pattern of behaviour. There is certainly very little discipline.
	Yet it was this stability and growth pact which was supposed to be the rock on which the whole thing rested pending the arrival of full political union in Europe. I remember going to see the then chairman of the Bundesbank, Mr Hans Tietmeyer, before the arrival of the euro and asking him how it would work if there were no political union. Chancellor Kohl had said many times that there had to be political union for it to work. Mr Tietmeyer said that it would be all right because the stability pact would hold everything together. That was the structure on which the whole system would rest. But now that structure has begun to wobble; indeed, it has come apart completely.
	The third pillar, political union, has not arrived. Moreover, as noble Lords have said, the prospects for it have been very severely shaken by recent events and by the French and Dutch referendums.
	So the outcome, which we can all see, is that the euro, which until recently looked remarkably strong, suddenly looks in financial markets to be a riskier proposition. If one adds to that the strains that already existed, of trying to impose a single interest rate on 25 highly diverse economies, one can see why the financial community is getting increasingly uneasy about the whole thing. Indeed, the other day, the OECD—not at all a critic of the euro-zone—stated that it now sees the euro-zone as a zone of "widely divergent" economic activity. That is a challenge to those who hoped that by now there would be a harmonised and uniform pattern of economic activity.
	As we have heard from noble Lords who speak with enormous expertise, the Italians are finding it very irksome indeed. An Italian Minister has spoken out calling for the return of the lira. Lombard Research told us yesterday that its Italian informants believe that the euro is "asphyxiating" the Italian economy. As the noble Lord, Lord Rees-Mogg, so graphically described, Italy no longer has the opportunity to find an outlet, a steam-release value, in devaluation. For many years, it has not had the political strength to resist public spending growth or to impose swingeing internal cuts.
	Meanwhile, the Dutch have also complained loudly. They have said that they should have followed the British policy and stayed well clear of the euro-zone. There have even been rumours from Frankfurt of all places, the heartland of financial prudence, that all is not well with the euro.
	The irony in all this is that the main alternative in international markets to the euro, namely the US dollar, has been looking far from healthy itself. Very recently, the central banks of China, Japan, South Korea and other Asian nations, which over the past few years have been patiently accumulating enormous dollar reserves to prop up the dollar and finance American consumption, were just beginning to switch some of their holdings into euros. That is why the dollar had been sagging and why the euro had been rising so amazingly high.
	Suddenly all that has changed. The euro's longer-term future no longer looks so good, so we now hear that some of the Asian central bankers are having second thoughts. Of course, the outward and visible sign of that is a very sharp drop in the euro/dollar exchange rate.
	So where now for a currency which was born with high hopes but which now has not only not a single government behind it but no hope that such a government will ever come into being? One obvious point is that the British will, I imagine, be reinforced, including this Government, in their determination to stay well clear of the euro-zone and therefore clear of the very sharp swings between the euro and the dollar which have added to international instability. We have always been told that the euro was going to increase stability; of course it has done the opposite.
	Another likelihood is that the recent new entrants into the EU from central Europe will be a little more cautious before they commit themselves to the euro-zone and give up their own denominations. On talking to some of them recently, it seems that they will probably favour a kind of semi-fixed relationship with the euro, not unlike what went on under the old deutschmark zone. That system existed exactly so that a number of smaller European countries could keep their currencies roughly in line with the then all-powerful deutschmark.
	That is all right for those which have not joined. For those which are in already, as has rightly been said, the exits are not nearly so easy. In fact, if Italy tries to disengage, the immediate effect would be to make its borrowing very much more expensive. Furthermore, a very large number of people in western Europe, including politicians, have invested heavy political capital as well as personal commitment in making the single currency work.
	All that suggests to me that while the euro may lose some of its shine, it will probably survive for some years in a more modest form, possibly within a currency union covering France, Germany, Belgium, Spain and maybe Italy if it can get a strong enough government to impose reform. It will be a zone of relatively slow growth and weak competition, possibly protecting itself increasingly with barriers against rising Asian challenges and other cold and unwelcome trade winds.
	Eventually, of course, that will lead to falling living standards and impoverishment. But—one must be realistic—the process could take many years. In the mean time, all those countries will remain very pleasant and delightful places to visit and in which others can holiday and in which the euro currency can be used in an atmosphere of tranquillity, free from the cold winds of Anglo-Saxon competition and other unwelcome outside forces.
	I end by saying that if that is the way these once great European nations wish to manage their decline, who is to say that they are wrong to choose it, if they so wish? All I would add is that it is not for us.

Lord McKenzie of Luton: My Lords, I start by thanking the noble Lord, Lord Dykes, for initiating this debate and wish him, like other noble Lords, a speedy recovery. I thank the noble Lord, Lord Roper, for stepping in at short notice and so expertly. I also thank all noble Lords who have participated in today's debate. As others have said, it rounds off a week in which Europe has been at the centre of our deliberations.
	I should particularly like to congratulate my noble friend Lady McDonagh on her excellent maiden speech. Her impressive career of course encompasses, as she pointed out, a very successful period in one of the UK's toughest assignments—as General Secretary of the party that we share. I have no doubt that her skill and experience in that and in other fields will be brought to bear in our work in the future. I look forward to that.
	This has been an interesting and useful debate. A number of important points have been raised. The Motion asks the House to call attention to current trends and developments in the euro. By virtue of this debate and the issues covered by noble Lords, we have indeed given due attention to the subject matter in question.
	We have had a full range of views—those clearly in favour, those clearly against and one or two perhaps in the middle. At the heart of our debate must be the analysis that Europe's and the euro area's low growth and current economic performance stem from structural policy weaknesses. Those challenges were referred to by a number of noble Lords—the noble Lords, Lord Biffen and Lord Taverne, and my noble friend Lady McDonagh. The noble Lord, Lord Howell, made the interesting point that we are making the same kind of analysis; we may not draw the same conclusions in all respects.
	The right policy response is therefore the pursuit of structural reform to promote employment, raise productivity and increase flexibility in labour, product and capital markets. That flexibility should be pursued alongside fairness to create opportunity for all in a globalised economy.
	Economic and monetary union (EMU) puts an additional premium on structural economic flexibility, since to be successful in monetary union countries need even more flexibility to adjust to change and to unexpected economic events in the absence of monetary policy levers at the national level.
	Alongside EMU, global economic change and the challenges of ageing populations underline even more the importance of rising to the reform challenge and enhancing economic flexibility and adaptability. We are part of a rapidly changing global economy. To improve its economic performance relative to the US and match the recent growth rates of other successful developed economies such as Canada and Australia, Europe must take urgent action to promote employment, raise productivity and increase flexibility in labour, product and capital markets.
	The noble Lord, Lord Biffen, quoted the noble Lord, Lord Lawson on the need for a pause, which he hoped would be extended. I put to him that the issues that global economic challenges bring mean that that pause cannot be too long. We need to act now. We need to get that debate under way and we need to get action under way.
	The Lisbon programme of economic reform has been refocused by EU leaders on promoting growth and employment. Those are the areas in which Europe most needs to succeed in order to preserve fairness and compete in a global economy that puts a premium on skills, innovation and flexibility.
	In summing up, I turn to some of the detail of the issues that have been raised. The Government's policy on UK membership of the single currency was set out by the Chancellor in his Statement to Parliament in October 1997. It remains unchanged. In principle, the Government are in favour of UK membership; in practice, the economic conditions must be right. I do not believe that that can reasonably be interpreted as staying well clear.
	My noble friend Lord Harrison highlighted benefits of price transparency; elimination of exchange risks; and the single market and its benefit to consumers. The macro case was made by my noble friend Lord Peston and referred to by the noble Lord, Lord Taverne.
	The determining factor underpinning any government decision on UK membership of the single currency is the national economic interest and whether the economic case for joining is clear and unambiguous. The Chancellor's Statement to the House of Commons on 9 June 2003 on UK membership of the European single currency set out a reform agenda of concrete and practical steps to address the policy requirements identified by the June 2003 assessment. Budget 2005 reports on progress include the introduction in December 2003 of a symmetric inflation target as measured by the consumer prices index—CPI inflation has been within one percentage point of its target since its inception; reforms to address both supply and demand in the housing market through implementing a programme of change to increase supply and responsiveness of the housing market, as recommended in the Barker review, and action taken in response to the Miles review on the mortgage market; reforms at national, regional and local level to enhance the flexibility of labour, capital and product markets in the UK.
	Those reforms are right for the British economy in any event. They will also assist the process of achieving sustainable and durable convergence and the flexibility necessary for Britain to succeed sustainably within the euro area. Although the Government do not propose a euro assessment to be initiated at the time of Budget 2005, the Treasury will again review the situation at Budget time next year, as required by the Chancellor's June 2003 Statement.
	The Government also continue to pursue the objective of a European stability and growth pact that takes into account the economic cycle, debt sustainability and public investment. Greater focus on reducing debt and maintaining low debt, with the flexibility for low debt countries such as the UK to invest in provision of public services, has our strong support.
	Several noble Lords commented on the state of the stability and growth pact. The noble Lord, Lord Roper, commented that he thought that concerns about its application and suggestions that larger states were ignoring it were at the heart of the Netherlands' referendum outcome. The noble Lord, Lord Rees-Mogg, said that it was critical and not operating in practice. The noble Lord Taverne also referred to it.
	We need to put it in context. Obviously the Government would not comment on the fiscal position of any particular member state, but to suggest that the pact is dead is incorrect. The treaty remains unchanged; the 3 per cent and 60 per cent debt reference values remain unchanged. As the ECOFIN agreement states, the Council and Commission are resolved to preserve and uphold the reference values of 3 per cent and 60 per cent of GDP as the anchors of the monitoring of the development of the budgetary situation. As set out in the treaty, if a member state's deficit rises above 3 per cent the Council will assess whether an excessive deficit exists based on relevant factors. That remains unchanged. I can tell the House that nine member states, including three euro-area countries and six new member states, are currently at different stages of the excessive deficit procedure.
	At present, although some member states are performing relatively well, as a whole Europe is losing ground in comparison with key developed economies and unemployment remains high. Why is that? Since 1996, annual average growth in GDP per capita in the euro-area has averaged about ½ per cent less than in the US. In 2004, real GDP growth in the euro area was less than half that in the US. Stronger growth in non-euro area countries—Sweden, the UK and the new member states—boosted growth for the EU 25 as a whole to about 2½ per cent in 2004, compared to 4½ per cent in the US. As a whole, Europe's growth rate still lags behind those of its main competitors.
	As a result of that persistent gap, the gap in living standards between the US and the EU 15 has widened back to above 30 per cent. Growth accounting analysis suggests that Europe's labour market performance explains around two-thirds of Europe's gap in living standards with the US; the remaining third can be attributed to Europe's lower productivity levels.
	Increased employment is the best route to social cohesion. Despite recent efforts to boost employment and marked success in some member states, especially in raising female employment, inactivity rates remain high, with about 93 million inactive people of working age across the EU 25. The employment rate of older workers remains especially low and well below that of major competitors such as the USA and Japan.
	Moreover, at around 9 per cent, Europe's unemployment rate is considerably higher than that in the US and Japan, leaving 19.5 million people unemployed. In 2004, unemployment rates averaged close to 10 per cent in Germany, 9 per cent in France and 8 per cent in Italy. Much of that was due to long-term unemployment, reflecting labour market rigidities. Nearly 50 per cent of the unemployed in Germany and nearly 60 per cent in Italy are out of work for more than a year, compared with less than 10 per cent in the US and Canada. That reverses a long-standing European strength.
	Raising productivity levels will also be crucial for Europe to improve its long-term economic performance and living standards. Europe underperforms the US in terms of both output per hour and output per worker, and the gap has been widening since the mid-1990s, reversing the trend of catch-up with US productivity levels during the three decades following the Second World War.
	Recent analysis suggests that the underlying causes are largely structural, reflecting a failure to boost services productivity; the relatively small size of the EU's ICT-producing sector; and the EU's larger share of low-productivity non-ICT-using or ICT-producing manufacturing industry. That points to a clear need for further action to promote the key drivers of productivity: increasing product market competition; enhancing the EU's frameworks for innovation and enterprise; and upgrading the skills of both existing workers and new entrants to the labour market so that they can exploit the opportunities of new technology.
	In its May 2003 review of monetary policy strategy, the European Central Bank stated that it would aim to maintain inflation close to 2 per cent in the medium term. To date, euro-zone inflation has remained near, and in recent years above, 2 per cent and deflationary risks have not materialised.
	The ECB framework is very young and continues to evolve. The operation of monetary policy needs to be seen as an evolving process in which both the ECB and markets are learning. Since it took control of monetary policy, the ECB has made several changes, including the biennial publication of staff macro-economic projections and moving to monthly rather than fortnightly decisions on interest rates. Inflation and output have been relatively stable in recent years, with output fluctuating less in the recent downturn than it did in the 1990s. My noble friend Lord Peston made that point.
	Noble Lords raised several points about the ECB. My noble friend Lord Harrison probed the mandate of the ECB. As he rightly identified, its primary objective is to maintain price stability but, without prejudice to that objective, it should support the general economic policies of the Community. His point was that greater emphasis ought to be placed on that. I agree.
	My noble friend Lord Peston referred to secrecy, and certainly it should not be an insuperable issue to publish even the minutes on an anonymous basis. The issue of a symmetric target for inflation is also important.
	The advent of EMU is itself a driver for pursuing structural reform and enhancing economic flexibility, especially in the euro-area. To be successful in monetary union, countries need even more flexibility to adjust to change and to unexpected economic events, once their ability to vary their interest rates and exchange rates has gone and the euro and the single European interest rate are in place. There is the need to tackle unemployment and inflexibility to make sure that Europe as a whole is able to withstand any shocks that arise.
	EMU membership therefore puts an additional premium on ongoing reform of EU labour, product and capital markets. In this context, the Government will continue to argue that employability, flexibility and stronger competition policies must be a top priority, so that EMU can be sustained. It is important to enhance the flexibility and dynamism of the European economy and build on the achievements to date, if the full benefits of EMU are to be realised. That will be particularly important as EMU expands to take in the new member states that joined the EU in 2004.
	Several noble Lords entered into the debate about whether monetary could go successfully only hand in hand with political union. The noble Lord, Lord Roper, referred to the factors that would need to be in place if that were not to be the case, as did the noble Lords, Lord Taverne and Lord Howell of Guildford. The noble Lord, Lord Rees-Mogg, probed the point in his contribution. Our position is that they need not go hand in hand, but fiscal and monetary discipline is extremely important in the absence of those processes. The noble Lord, Lord Taverne, said that political union was dead; I think that is right.
	Alongside EMU, global economic change further underlines the importance of rising to the reform and flexibility challenge. The global economy is undergoing dramatic change, brought about by rapid technological change and the falling costs of communication; by the increasing ease with which goods and services can be subdivided and traded between countries and continents; and by the market reforms in large emerging economies such as China and India that enable them to seize the opportunities that come from closer integration into the global economy.
	Europe must act to tackle persistent low growth and to realise the full benefits of globalisation. Some policies that proved successful in the era of post-war catch-up are no longer appropriate in a global environment that demands greater flexibility and competition. Europe must equip its workers with the skills necessary to embrace globalisation. My noble friend Lord Peston addressed that point. To improve its economic performance relative to the US and match the recent growth rates of other successful developed economies, Europe must take urgent action to promote employment, raise productivity and increase flexibility in labour, product and capital markets.
	For a full analysis of the economic challenges facing Europe and how we can best respond to them, I refer noble Lords to the Treasury paper published alongside Budget 2005 entitled Long-term global economic challenges and opportunities for Europe.
	Europe and the euro-area must therefore adapt to the changing balance of global economic activity and the rise of fast-growing emerging economies to realise the full benefits of economic and monetary union. In her maiden speech, my noble friend Lady McDonagh stressed the need for change. The 2005 spring European Council agreed a renewed focus on jobs and growth, following the mid-term review of the Lisbon agenda. The Government fully support those conclusions. The opportunities offered by globalisation should not be missed. Through the reforms to which I referred, the EU can capitalize on the growing interdependence of the global economy and stimulate growth and employment within its borders.
	Our aim is a Europe that looks outwards rather than inwards and advances the pace of structural reform to meet the challenges of globalisation. The UK aims to work closely with its European partners to achieve that aim during its presidency of the EU. My noble friend Lord Peston made the point that, if we were not in the euro, we would lose influence; I believe that we gain influence if we are making the arguments and talking about modernising Europe, as the Prime Minister did this morning in his powerful speech to the Parliament.
	Key to the success of the EU economy will be a risk-based approach to the enforcement and implementation of regulation. A risk-based approach including competitiveness testing, simplification of existing legislation and alternatives to regulation will minimise the burden of regulation on business. The noble Lord, Lord Biffen, touched on the impact of regulation and, I think, prayed in aid Harold Wilson for the point that he was making. The concept of a risk-based approach to the enforcement and implementation of regulation is designed to attack that issue.
	Member states should take urgent action on labour market reform; further regulatory reform; steps to create a dynamic and competitive single market; knowledge and innovation and enterprise for growth; and on the importance of external openness to trade and investment as a driver of growth and productivity. Member states should set out how they aim to deliver those objectives in their Lisbon national reform programmes later this year. The issue of whether a single market is a correct aspiration was raised by the noble Lord, Lord Biffen. My noble friend Lady McDonagh talked about how a single market was not inconsistent with social justice and how economic prosperity and social justice could go hand in hand.
	Although some member states are performing relatively well, as a whole, Europe is losing ground in comparison with key developed economies, and unemployment remains high. In 2004, real GDP growth in the euro-area was less than half that in the US. The underlying factors contributing to Europe's low growth and economic performance stem from structural policy weaknesses, and therefore the right policy response is the pursuit of structural reform.
	EMU and global economic changes respectively place an additional premium on flexibility in order to adjust to change and to unexpected economic events and to compete effectively in the global economy. Against that background, the Government have set out an agenda for European economic reform for the UK presidency of the European Union. It is by addressing that reform agenda that the main economic challenges can be dealt with.

Lord Avebury: rose to call attention to the level of political and religious violence in Bangladesh; and to move for Papers.
	My Lords, human rights in Bangladesh have not been high of the agenda of the media or the public in this country, in spite of the close historical, sporting and cultural ties between our two countries. The Economist observed last week that the problem was,
	"among the most sparsely covered by the international press".
	It explained that that was partly because the Government there made it hard for international journalists to visit and partly because, when they did visit, the Government did not like what they wrote—in particular, the recent suggestions that the country was seeing a rise in Islamic extremism and was becoming a haven for international terrorists.
	The biggest headache for western diplomats in Dhaka, the Economist says, is whether democracy can survive and whether the elections scheduled for 2006 will be held. The main opposition party, the Awami League, threatens to boycott the polls, in the face of a rising tide of violence against its leaders and supporters.
	The Home Office was forced to take Bangladesh off the so-called white list of supposedly safe countries to which asylum seekers could be returned without the right of an in-country appeal when the High Court ruled in February, after an exhaustive survey of the evidence, that no rational decision-maker could have been satisfied that there was in general in Bangladesh no serious risk of persecution. The FCO's latest human rights report describes Bangladesh as the second most dangerous country in the world in which to be a journalist. Even at a distance, one can see that reflected in the paranoia of the reaction to an attempt to hold a rational discussion of the rise of extremism, intolerance and violence, particularly as they affect religious, ethnic and political minorities, as well as secular and progressive groups. Last Friday, a steering committee under my chairmanship convened a one-day meeting at SOAS to discuss the matters. We understood that the high commission had protested to the Foreign Office about the holding of such a meeting. The noble Lord may be able to assure us that it was told that, in this country, the Government have nothing to say about any lawful discussions, including those concerned with human rights. Just for the record, we invited the high commissioner and four other people representing the Bangladesh Government to participate. We gave them two 10-minute slots in the plenary session compared with only one for all other groups, including the official opposition.
	The High Commissioner was heckled when he said that there was no violation of human rights in Bangladesh; that many MPs belonging to the main party now in government—the BNP—were assassinated during the 1996–2001 Awami League terms of office; and that the rise of Ahmadiyya Muslims was not so important because there were only a small number of them compared with the majority Sunni population. But, in spite of those provocative remarks, order was maintained by the chair and the high commissioner was allowed extra time to compensate for the interruptions.
	When the second government speaker in turn exceeded his allotted 10 minutes and refused to obey the chair's ruling that he should sit down, the high commissioner and his group—twice as many as the number that we had officially invited and in spite of being told in writing three times that we could not accept the additional nominations because of the limited capacity of the hall—created a disturbance and then walked out. He subsequently issued a false statement claiming that the meeting had broken up in disarray, when, in fact, it continued peacefully until 18:00 hours as scheduled.
	By walking out, the high commissioner's group forfeited the chance to participate in the afternoon workshops, which were very useful in focusing on particular aspects of the problem; namely, human rights in general, the persecution of minorities; the rise of religious extremism and the threat to secular democracy; and international aspects, including the role of donors and international NGOs.
	I believe that this was the first time that an attempt had been made to look at the situation of all of the besieged minority groups together and, if possible, to point to ways of halting the downward slide to anarchy, lawlessness and repression. The participants all agreed, apart from the Bangladesh officials, that it was an outstanding success. They were enthusiastic about setting up a network that will continue the work of the conference, as I hope Ministers will have seen from the resolution, a copy of which was sent to them.
	We would have liked to hear from the two official spokesmen how they saw the key governance challenges that they face and how best outside assistance could help to address them. That was the subject of a meeting held last February in Washington between members of the donor community, including the UK, US, EU, World Bank and the Asian Development Bank. Since then, I know that the UK and the European Union have raised further concerns with Dhaka. Unfortunately, it was as if none of those had registered with them.
	The British high commissioner in Dhaka only a few weeks ago expressed concern over the lack of progress in the investigation of an attempt on his life, in which three people died, and over the continuation of similar attacks. He mentioned the increased aid that the UK is giving for police reform, which is part of a package that makes us the biggest donors—larger even than the World Bank. Will the Minister say whether, as Mr Choudury suggested, aid can be deployed effectively to improve the law and order situation in the absence of much firmer leadership from the Government, in a situation where we have, as one participant describes it,
	"the politicisation of the Civil Service, undermining of the judiciary and utilisation of the security forces to promote narrow party interests"?
	The UK has repeatedly pressed Bangladesh to investigate terrorist crimes and to bring those responsible to justice. The dreadful murder of Shah A M S Kibria, the distinguished former Minister and ambassador to the UN, and the failure of the authorities to take the steps that might have saved his life, was only the latest in a series of outrages, which included attempts on the lives of the Leader of the Opposition in August 2004 and, of course, on our high commissioner earlier in that year.
	The Bangladesh high commissioner did not mention the belated request that I understand has been made by his Government to Interpol and the FBI for help in tracking down "terrorists sheltered by a foreign intelligence agency" allegedly responsible for the killing of 21 people in the attack on the Leader of the Opposition's rally last August or the improper release of confessions said to have been made by two people held in custody for those offences, although neither of them have been taken to court. Some of us saw those moves, and the orders issued to law enforces to strengthen their efforts to arrest known terrorists, as preliminary results of the conference. Can the noble Baroness in her reply say whether we have received any requests for help in the detection of those crimes? If so, what reply have we made?
	Even if they convict a few terrorists, that will not deal with the larger penumbra of religious and communal hatred which has inspired attacks on secular organisations, such as the Grameen Bank and the Bangladesh Rural Advancement Committee, which have made significant contributions in the past towards the country's development, the Ahmadiyya Muslim community's mosques and members, and places of worship belonging to the Hindu, Christian and Buddhist communities.
	In some of those attacks the police actively collaborated with the bigots. I hope that the training we provide for the police will help them to enforce the law more impartially. But what can we do as presidency of the EU from next week to raise the pressure on Dhaka, not just to end terrorist atrocities and improve the performance and behaviour of the police, but to stamp out the hatemongers who create the climate in which the terrorists thrive?
	The UN Rapporteur on Religious Freedom reported to the Human Rights Commission in March on the killing of an Ahmadiyya Imam, a Hindu priest and a Buddhist monk, as well as other sectarian outrages and threats. The Government's response has been merely to reiterate that freedom of religion is guaranteed by the constitution while, at the same time, they have banned publications by the Ahmadiyya Muslim community.
	The Government have indeed banned two extremist bodies, but not the International Khatme Nabuwat Movement Bangladesh, whose members incite to violence against the Ahmadis, as we saw in a terrifying video that was shown at the conference on Friday. There is no law in Bangladesh forbidding incitement to religious hatred. If there is a law against incitement to commit other substantive criminal offences, it is not enforced against religious fanatics. An informer from another extremist group—the Jagrata Muslim Janata Bangladesh—told the police that that group was engaged in a systematic campaign against cultural activities considered to be non-Islamic.
	Former Minister, Professor Abu Sayed, claims that camps have been established in Bangladesh for the training of thousands of militants, with the assistance of coalition partner, Jamaat-e-Islami, and that these groups were infiltrating public departments and civil society with the aim of launching an Islamist revolution. He is not the only person to have made those allegations. But the response of the police is not to investigate those charges, but to raid the professor's house and to confiscate books on the rise of communism and extremism.
	The UN Special Rapporteur on Extrajudicial Executions said that he has received no substantive response to the three communications sent to the Bangladesh Government about killings by the rapid action battalion. Representations by Amnesty International have also fallen on deaf ears. Amnesty International says that the RAB killed 147 people in 2004. It talks about a growing tide of violence on members of the Opposition and on public places such as cinemas.
	Our conference heard from representatives of the indigenous peoples of the Chittagong Hill Tracts where the 1997 peace accords have not been implemented as the CHT ministry has now publicly acknowledged. The people are steadily being deprived of the ancestral lands which have belonged to the Jumma people from time immemorial. The very demography of the CHT is being changed under military occupation. The commission set up to resolve land disputes has never been activated. The attacks on tribal people in 2003, which involved killings, rapes and the burning of hundreds of homes, have not been properly investigated, like all of the preceding atrocities over many years.
	Violence against the press is on the rise. The US ambassador says that journalism is the most dangerous profession in Bangladesh. In the past 12 months, more than 400 journalists have received death threats, 320 have been tortured and five have been murdered, including Mr Golam Mahfuz, deputy editor of a daily paper, who was stabbed to death less than a month ago. The editor and publisher of a former weekly tabloid were charged with sedition and the publisher spent 17 months behind bars before he was given bail.
	Apart from the perilous situation of the religious and ethnic minorities, violence against women and children in Bangladesh has reached an unacceptable level and the court system is stacked against the victims, as the Daily Star of Dhaka noted last Sunday. The Government do not enforce laws prohibiting discrimination against women, minority groups and people with disabilities. Bangladesh is an increasingly dangerous and threatening place for them as well as those belonging to minority faiths, ethnic groups, opposition parties and secular organisations.
	At the root of all those problems lies the cancer of extremism. Bangladesh is at the front line of the war against terrorism fuelled by a maverick branch of Islam that aims to transform the country into a Taliban-style dictatorship. But instead of acknowledging the threat to the country's stability and acting vigorously against the peddlers of hatred and violence, the government pretend that nothing is wrong. They have colluded with extremist groups and failed to defend the rights of vulnerable people, in spite of repeated pleas by the Foreign Office, the US State Department, the European Union and the agencies of the Human Rights Commission. They have managed to keep a relatively low profile in Europe, compared with other hotspots in the world, in spite of the danger that such bigotry and hatred, if allowed to fester in Bangladesh, could spread outwards from the sub-continent to the rest of the world including Britain.
	The British Government and the people of this country must support embattled minorities and human rights defenders, and build solidarity in the struggle to preserve their vanishing freedoms. We must fashion a coalition for liberty that spans all people under threat and their allies throughout the world. I beg to move for Papers.

Baroness Uddin: My Lords, I thank the noble Lord, Lord Avebury, for bringing Bangladesh to the attention of the House. From the outset we have been well briefed on the debate. I thank all sections of the community that have provided us with extensive information. I shall make no apology for borrowing some of their comments, so I ask noble Lords not to cry foul.
	I also thank the noble Lord, Lord Avebury, for detailing some of the issues. To a certain extent, like other noble Lords, I shall merely add to his remarks.
	On a lighter note—if that is possible given the subject of the debate—I congratulate the Bangladesh cricket team on defeating Australia. I am glad that England also did very well at Trent Bridge on Tuesday. As always, I have two perspectives on this debate, which I shall come to shortly. Most of our household supported England while my husband and I hung by a thread in support of Bangladesh, so I am glad that they did not let us down. There lies the dilemma in taking part in this debate. I do not recall the previous debate in this House on Bangladesh, to which the noble Lord referred. As noble Lords may be aware, although Britain has been my home for more than 30 years, I was born in Bangladesh. I have regarded it as sufficiently important to spend all my spare time there and to encourage my children to visit whenever my purse allowed.
	I confess that, apart from a deep sense of family belonging, I have avoided, at all costs, becoming embroiled in the goings-on in Bangladesh. That is not to say that I do not acknowledge that what happens there deeply affects the Bangladeshi community in the UK, in which I am totally submerged.
	I came here as a 13 year-old, just after the civil war, when Bangladesh was led to victory under the leadership of Sheikh Mujibur Rahman, who is respected as the father of the nation. Much of my resilience, tenacity and ideals come from having witnessed the torture, rape, killings and utter destruction of that conflict. The knowledge that oppression, however miniscule, is totally unacceptable drove me to become engaged in fighting against prejudice and bigotry in Tower Hamlets and elsewhere.
	My contribution today comes from a deep love for my birthplace, wanting it to do well at all costs. The way in which Bangladesh has been seen this week within the Westminster village—with the historic defeat of Australia, a meeting held in the House by the Hindu Council on the treatment of that minority group, the conference chaired by the noble Lord, Lord Avebury, on human rights and the rise of violence, and now this debate—has come as a mixed blessing.
	For many seeking international attention on Bangladesh, these opportunities are an invaluable way of acknowledging the amazing progress that it has made in its relatively short existence. Bangladesh has a lot going for it, for which all political parties can take credit: continuing democracy and Bangladesh's steady economic growth of more than 5 per cent. The struggle for freedom and democracy in Bangladesh achieved a hard-won multi-party system of political representation in 1991. There have been elections and a peaceful transfer of power between political parties twice since then.
	Bangladesh has come a long way since its birth in 1971. Despite the countless lashings of Mother Earth and all the difficulties associated with civil war and climate change, the country has become self-sufficient in food provision. It has dramatically cut its population growth rate and increased access to education, particularly for girls. That is remarkable by any stretch of the imagination. Bangladesh is rightly proud that it is no longer dependent on international aid, and the micro-credit success stories have been acclaimed and acknowledged internationally.
	The life expectancy of men and women has increased, and education and economic opportunities have expanded for Bangladeshi citizens. NGOs are encouraged, by and large, to play an important role, particularly in the empowerment of women. Bangladesh should also be rightly proud of its history of a free and active press. I acknowledge the contribution of the noble Lord, Lord Avebury, on the FCO's comment, which is deeply worrying for everyone.
	On the international stage, Bangladesh is the second largest contributor of troops to UN peacekeeping forces. It has demonstrated a strong commitment to international peace and security through the deployment of more than 8,000 peacekeepers worldwide. They enjoy a well-earned reputation for discipline and effectiveness. Those are huge national achievements; they are the achievements of all Bangladeshi people.
	Throughout, of course, Britain has stood shoulder to shoulder with Bangladesh. That friendship and understanding is centuries old, with Britain and Bangladesh working together in politics and trade, as well as cultural and countless social interchanges. We remain the largest single investor in Bangladesh, with more than 50 UK companies doing business there.
	The UK is at the forefront of Bangladesh's efforts to help to combat poverty and meet the millennium development goals. It contributed £29 million to provide flood relief last year.
	The attack in Sylhet on our High Commissioner, Anwar Choudhury, in May last year was absolutely shocking, and the subsequent attacks on the mayor in Sylhet, in August; on the Awami League and the opposition leader, on 21 August, with the subsequent death of a prominent female leader, Ivy Rahman; and, as the noble Lord, Lord Avebury, mentioned, on a well-respected UN ambassador and former Bangladeshi finance minister, have rightly led to widespread international condemnation and concern. The perpetrators remain at large, which has propelled an outcry in both Bangladesh and the international community. I hope that the Government of Bangladesh will want to do more than provide assurances that those attacks are being taken seriously and that they will be dealt with using the full force of the law.
	No one, most of all the perpetrators of such crimes, should be left in any doubt that violence of such a magnitude will not be tolerated in a democratic country, albeit a young one. So the statistics compiled by various human rights organisations on human rights abuse allegations in Bangladesh make for very grim reading. Bangladesh is rightly judged alongside all other countries according to how it treats the most vulnerable in society. It too must be treated equally. I hope that there is consensus that, without respect for universal human rights, there is no potential for democracy to grow.
	As I was growing up in this country, I believed that there was a clear demarcation between right and wrong— perhaps I was seeing it through the tinted vision of youth—but, in my latter age, the global context has shifted and, however much we dislike it, there are several indications that there is no parity of treatment on the issue of human rights abuse. It seems to be applied in different contexts and according to different standards of behaviour. There is a perception in Palestine and elsewhere that we have allowed a free-fall in standards while overstraining our sense of justice to accommodate those who are regarded as "friends". We have to have an internationally agreed basic human rights principle and an understanding that freedom of speech and a right to religious expression are fundamental to all of us.
	In this regard, as has already been said, I know that there is rising concern about the level of continuing violence in Bangladesh—not least because there is a wide-ranging consensus on the fragile law and order situation, which has meant that the implementation of the rule of law, particularly by the special forces known as RAB, is counter to good practice.
	Good governance has to be practised at all levels in order to create confidence in the communities and internationally. From that point of view, whether it is from the policeman on the street, from the local district administrator or from the top levels of government and the judiciary, we require assurances. While RAB is regarded as being present by popular demand, it perhaps demonstrates that the country's force of law is not able to function properly in the usual way.
	It has been reported that the British High Commissioner in Bangladesh commented recently that he hoped that, if apprehended, the perpetrator of the grenade attack on him in Sylhet would not be killed in cross-fire. There is deep concern that cross-fire is one of the tactics used by RAB, for which it has become well known.
	These debates are taking place in the context that we now live in a global world and are no longer able to be comforted that what we do in our own country is our own business. I add here a caution that those who live in glass houses should not throw stones. Globalisation is rapidly transforming the way in which we live and strong governance, a respect for human rights and law and order are prerequisites for development and growth. We have become world citizens. I hope that everyone involved in the welfare of Bangladesh will accept that debate in the public arena is a positive and that there is no need to be defensive when things are not as they should be.
	One of the primary reasons for the lack of progress in many arenas of Bangladesh is that the two main parties remain at loggerheads, thereby leaving Parliament in limbo and people in doubt about the seriousness of the commitment to continue building democracy. They have nothing to look forward to in the way of role models.
	I hope that there is consensus that international concerns about the shape of the political landscape in Bangladesh should lead to some re-jigging in the light of what has become apparent, and that the Bangladesh Government will recognise that this is having an adverse effect on the perception of Bangladesh internationally, notwithstanding its tremendous economic and social success.
	As has been said, the next election in Bangladesh will be a key challenge. I hope that the political parties can begin to move away from hostile confrontation to a spirit of accommodation, agree basic standards of conduct and abide by them. I look forward to hearing from the Minister what role the UK may play in facilitating this.
	Democratic principles cannot be enforced or made hostage to party politics and personal gain. Surely it is no comfort to the Bangladesh Government that they are continually regarded as a corrupt force. They now have the added baggage of having to defend their actions on human rights violations, particularly against other religious minorities, as well as the accusation that they are harbouring extreme activities among their own.
	I should like to see the Bangladesh Government make it apparent to the world outside that they are seriously concerned about the numerous allegations of violent incidents and abuses taking place against the minority. I hope they will invite a parliamentary group to visit at the earliest opportunity. Opening the doors to a greater understanding and the reality on the ground may go a long way towards giving some answers.
	If left unanswered, these concerns and allegations of corruption and abuse will tarnish the international reputation of Bangladesh and discourage further inward investment, thereby damaging the prospects for long-term prosperity and making ordinary people suffer.
	As the next election looms nearer it is important for Bangladesh to ensure that every step necessary is in place to demonstrate that it can earn the confidence of the world community. No matter how much each of us thinks that what we do is our business, that we can cushion our existence and take comfort from the fact that even the UK and the USA are under scrutiny for their human rights records, there should be no place to hide if we are to live together.
	Bangladesh faces a thousand challenges—all of those to which I have referred and, perhaps, impending water shortages, huge floods, global warming and arsenic poisoning. These should be matters for discussion and attention. I hope that we will not neglect them in the future.
	As a member of the All-Party Group on Bangladesh, I hope that we will take note of the debate today, perhaps forge some links with other Members and work through some of the resolutions put forward by the conference. I also hope that the Minister will look at the resolutions and consider how best to work with the Bangladesh Government to ensure that they are open and transparent when discussing difficult issues such as human rights violations.
	Perhaps I may borrow a quote made by the UN Secretary-General earlier this month. It might not be totally appropriate but, nevertheless, it shows us where we are. He said:
	"Because of globalisation we live in a world of inter-connected threats and mutual vulnerability between rich and poor and weak and strong. No country can afford to deal with today's threats alone and no threat can be dealt with effectively unless other threats are addressed at the same time".
	So, as a daughter of Bangladesh, I ask that we—as friends of the Bangladesh Government and as partners in adversity—promise to work together with mutual respect while, at the same time, explicitly stating that human rights abuse, however small, is the business of all of us. Let us promise that we will not allow Bangladesh or any other country—especially those we regard as friends—to get on with it by themselves.

The Lord Bishop of Coventry: My Lords, I begin by commiserating with the noble Baroness, Lady Uddin, who cannot read her own handwriting. I suspect that I speak for many in your Lordships' House when I say that I cannot read mine either, with or without glasses.
	It takes a certain temerity for a white Anglo-Saxon who has never visited Bangladesh to take part in a debate such as this. I justify it, perhaps, by reminding your Lordships that the City of Coventry, where I live and where I am privileged to serve, has a significant Bangladesh community. This community has given rise to a number of restaurants, which are generically referred to as "Indian" restaurants, where they serve what is generically referred to as "curry". This is one of the huge advantages that we have in Coventry. In passing, I would point out that the curry in Coventry is just as good as that in Birmingham or Leicester, and second only perhaps to that in Bradford.
	When I welcomed two new colleagues to my staff team last week I decided that we would take them out to a meal in a local curry house. Halfway through the meal the manager of the restaurant came up to me and began to tell me the story of his family in Bangladesh. It appears that they are part of the Ahmadi community. As he told the story his eyes filled with tears and he asked me, an Anglican bishop, to pray for him and his family. What I wish to say today is to some extent focused on that community.
	The Ahmadiyya community in Bangladesh is small. Its numbers are estimated at around 100,000 out of a population of some 140 million. As we have already heard, many respected international monitors point to increasing evidence of an orchestrated campaign on the part of Islamist extremists against this small minority. We are hearing stories of mob violence, including attempts to occupy Ahmadi places of worship. Several homes have been destroyed and Ahmadi converts, it is said, are being detained against their will and pressured to recant. The reason for this seems, at one level, quite simple. These people are held to be at best unorthodox in their beliefs and at worst heretical.
	What concerns us today is not merely the attacks on a heterodox Muslim sect in Bangladesh. These are a presenting issue for something profoundly more worrying. We are speaking about attacks on one of the foundations of justice and peace in our world; namely, the right to religious freedom. These attacks are all the more sinister because they appear to be tolerated or even encouraged by the state. Last week the Human Rights Watch accused the supposedly secular government of Bangladesh of being complicit in religious violence. I quote from its report:
	"This is a dangerous moment . . . the authorities have emboldened extremists by failing to prosecute those involved in anti-Ahmadi violence and by banning Ahmadiyya publications".
	All this may sound remote and perhaps of little interest to most of us in the West—that is, until we remember that one of the major pilgrimage centres for this community is in rural Surrey, where 30,000 people gather each summer. So the geographical links to this persecuted minority are not so distant as we might at first think. By all accounts, the largest mosque in western Europe belongs to this community, and is to be found in Morden.
	What should concern us more than geographical proximity is the issue of the state-sponsored oppression of a religious minority. If the violence and intimidation against one small community in Bangladesh is tolerated, whose place of worship or home will next be burned; who will next be beaten? There are already signs that other minority religious groups such as Hindus are beginning to suffer the same kind of violence.
	Precisely because we may be tempted to think of this as an obscure persecution in a far away place, we must redouble our efforts to be intolerant of intolerance. For some, the persecutions of the marsh Arabs in Iraq, or of Christians in Pakistan, or the spiral of violence unleashed in the Great Lakes region, were once similarly obscure and far away.
	I speak as a Christian, but most emphatically not with any sense of moral superiority. I am only too conscious that the Church in this land has in the past engaged in heresy trials which, in their turn, led to institutional violence. Those burnt at the stake or disembowelled for their faith are now generally held by both sides to have been honourable martyrs. We have, thank God, learnt that there is far more that unites us than divides us; but, even more significantly, that our common humanity is a God-given privilege that we despise at our peril.
	Equally, I am not insensitive to issues of doctrinal soundness or orthodoxy. I accept that the Muslim community world wide, both Sunna and Shia, finds abhorrent the idea that a late-19th century prophet should be thought to have superseded the prophet Mohammed as the ultimate messenger of divine truth. For Christians, a parallel might be the arrival of the Mormons, at about the same time, claiming that their holy book somehow trumps the Hebrew and Christian scriptures. Such claims to authority can all too easily divide communities, setting erstwhile friends and neighbours against each other in vicious and violent ways.
	The question we all need to ask, whatever our religious affiliation, is whether violence in the name of God can ever be justified. That very question has formed the basis of some very fruitful dialogue in recent years. It gave rise to the Alexandria Declaration in 2001. That was signed by top religious leaders from the Muslim, Jewish and Christian communities in Israel/Palestine, a process in which the diocese of Coventry was privileged to play a significant part. It led, in turn, to the Baghdad Religious Accord signed on 24 February 2004, in the preface of which the following statement is to be found: "According to our faith traditions"—
	this refers to Sunna and Shia Muslims, Christians and Kurds—
	"killing innocents in the name of God is a desecration of the laws of heaven and defames religion not only in Iraq but in the world".
	As ever, words alone are not enough, but I humbly suggest that such an approach is not without merit and might usefully be adapted to other situations, such as that under discussion today.
	I realise, of course, that much so-called religious persecution also has economic, ethnic and political elements. Indeed, power struggles come in many different guises. That may well be the case in Bangladesh, and I would welcome any insights that other noble Lords might have to offer, since such territory is certainly beyond my competence to comment on.
	In concluding, I thank the noble Lord, Lord Avebury, for initiating today's debate. I urge Her Majesty's Government to do all they can to bring pressure on the government of Bangladesh to ensure that basic human rights are observed and that freedom of religious thought and practice is not only tolerated but welcomed.

The Earl of Sandwich: My Lords, the noble Baroness, Lady Uddin, mentioned cricket. The expression on Mohammad Ashraful's face after he had scored his century and Bangladesh had beaten Australia by five wickets in Cardiff last weekend spoke for itself. So did the slogan on his T-shirt, which said "Grameen Phones". A great country, which has always unfairly been seen as a poor relation, first of western Bengal, then of India, then of Pakistan, has now excelled at the highest level of sport and boasts one of the most famous and successful examples of rural development anywhere.
	The Grameen Bank has become a symbol of micro-enterprise world wide, demonstrating how the very poorest communities can support themselves through their own efforts, and how a commercial bank can benefit from low rates of interest and exceptionally high rates of repayment. The poorest, in other words, are shown to be the most financially efficient.
	I saw this over many years when I visited eastern India and Bangladesh several times for organisations such as Christian Aid and CARE. I met the leaders of local NGOs such as BRAC, GK, Nijera Kori and Gono Unnayan Prochesta, which all have an excellent reputation in the aid world. I know that the DfID is involved with BRAC today in a major rural education programme.
	Apart from their business enterprise, I admired the vitality and skills of all the Bangladeshis I met. I saw health workers visiting the poorest families, craftsmen making artificial limbs and spare parts in an industrial workshop, labourers at night school, small farmers and their wives transplanting rice and fishing in ponds. I became nervous riding behind paramedics on their mopeds along slippery dykes, then impatient waiting for a delayed, crowded ferry to carry me across some of the widest rivers in the world.
	The people have endured much, and the many stories of survival and tragedy in successive disastrous floods still haunt anyone who has worked in Bangladesh, let alone lived there. It can be a dangerous place to live, as we have heard.
	Bengalis, east and west, are a highly intelligent, artistic and articulate people, and their strong opinions, while they often enliven democratic debate, sadly sometimes spill over into factional and sectarian violence. The noble Lord, Lord Avebury, has already spoken of the dangers to journalists, the threats to democracy, the human rights abuse and the fault lines between the many political parties and ethnic and religious groups.
	I also learnt that political violence can be at its fiercest at a local level, where the more progressive reforming elements clash with vested interests and local landlords. For example, I visited a clinic where a paramedic had been beheaded for asking too many questions about the causes of poverty.
	But I also remember some remarkable individuals who have helped to build this nation, such as Dr Zafrullah Chowdhury—to mention just one. He was a young medic who, having fought in the independence war, started a people's health centre called the Gonoshasthaya Kendra in a rural area outside Dakar. This health centre was remarkable in itself, training young paramedics in the "where there is no doctor" techniques, but he soon became aware of the political background and the power of the multinational drug companies, which were pricing products way out of reach of the rural poor. With some help from German and British charities, he built a drugs factory alongside his health centre to manufacture only the basic medicines on the WHO list, thereby undercutting the big pharmaceutical companies. Deservedly, he went on to enter politics and became for a time health minister. He was a man of extraordinary dedication and humanity.
	I mention these things because this has always been a nation of great fascination to me and a country of tremendous potential, character and colour. Yet it is also a country of great vulnerability because of its geographical position and its political weaknesses. It is resilient in dealing with successive natural disasters and very far from the basket case that is sometimes portrayed in the media.
	I should also mention that we in London are fortunate to have such a thriving Bangladeshi community, not to mention the curry, referred to by the right reverend Prelate, which brings this lively culture into the midst of our own.
	I was pleased to hear reference made to the Chittagong Hill Tracts. I would like to mention two minority groups in particular, the Biharis and the Rohingyas. The Biharis are in some ways the equivalent of Palestinians in south Asia. They are victims of racism, religious intolerance and a collapsed empire. Their story is long and complicated. Most of them are descendants of Urdu-speaking Muslim refugees who came to east Pakistan after partition in 1947. Before that, thousands of them were transported from Bihar by the British to build railways and support the administration in east Bengal. In the Bangladesh war of independence, the Biharis sided with Pakistan and have since been understandably resented. Few have been given citizenship, although a High Court ruling two years ago found in favour of one group. The Tripartite Agreement of 1974, which followed the independence war between India, Pakistan and Bangladesh, failed to resolve the problem of the Biharis. More than 30 years later, about 300,000 still live in about 70 camps, in wretched, crowded conditions with inadequate healthcare. They are unrecognised even by the UN as genuine refugees as laid down by the convention.
	As noble Lords will know, the case of the Biharis has at various times been brought up in this Parliament, notably by the late Lord Ennals, who achieved the only conference on the Biharis in Geneva, and by Ben Whitaker through the Minority Rights group and others. Repatriation to Pakistan was discussed, but, as so often, meeting humanitarian need through the UN was the only practical outcome.
	However, Britain seems to have lost any sense of responsibility that it once had. In her reply to the noble Lord, Lord McNally, on 22 May last year, the Leader of the House said that while DfiD's third largest aid programme was in Bangladesh, there was no special support for the Biharis through it. This year's departmental report, which has just been published, makes no mention of them, although I understand that some funding may have become available through the human rights and governance fund. What assistance are Her Majesty's Government giving to the Biharis?
	Some Members of this House have been involved with the Dakar Initiative, which aims to carry out a comprehensive needs assessment of the Biharis in the camps. Apparently, this project was offered to Her Majesty's Government, but nothing more has been heard of it. Will the Government undertake to make inquiries and, if possible, follow up this very worthwhile initiative as well?
	I should also like to bring up the case of the Rohingya, who are a Muslim minority in northern Arakan State in Burma. Here I speak as a council member of Anti-Slavery International. The Rohingya people suffer discrimination in Burma on the basis of their ethnicity and religion and, in Bangladesh, they are unwanted refugees. In Burma, the Citizenship Law of 1982 renders them stateless and their freedom of movement is highly restricted. They are routinely subjected to forced labour, extortion and arbitrary arrest.
	Human rights abuses in Burma, which are the subject of attention in the media today, have led to mass exoduses and a continuous influx of Rohingya refugees to Bangladesh. I understand that 20,000 refugees remain in two precarious refugee camps where the literacy rate is only 12 per cent and chronic malnutrition peaks sometimes at 65 per cent. Last September, the Bangladesh Government formally rejected a UNHCR proposal for self-reliance for these camps. Several incidents took place in Kutupalong camp, starting with a hunger strike in June 2004 and culminating in a violent police raid on 18 November, leaving three refugees dead and 42, including six women, imprisoned on what I understand were fabricated charges.
	Rohingya refugees continue to face intimidation, pressure to sign voluntary repatriation forms and serious abuses in the camps. In addition, the two remaining international NGOs were compelled to withdraw from the camps in the past two years. This raises concerns about the protection of, as well as the quality of humanitarian assistance to, the refugees.
	In Anti-Slavery International's submission to the UN Commission on Human Rights on 15 April, it urged Burma to end its policies of discrimination against the Rohingya and to repeal the 1982 Citizenship Law. It also urged Bangladesh to cease all coercion and harassment of Rohingya refugees, to conduct an independent investigation into the November killings, and fully to implement the recommendations of the joint assessment mission that was carried out by the UNHCR and the World Food Programme last October.
	The noble Lord, Lord Avebury, spoke of building solidarity. May I urge our Government to do their utmost to work with the international community to find durable solutions for both the Bihari community and the Rohingya refugees, instead of simply abandoning them?

Lord Dholakia: My Lords, I thank my noble friend Lord Avebury for this debate. He has a distinguished record of addressing human rights issues, and he has been fearless in his critique of regimes which abuse the rights and liberties of individuals. I am aware that many people are alive today because of the intervention of my noble friend Lord Avebury on their behalf. I have travelled to many countries, but have always found that my noble friend has been there before me. He has a deep knowledge of the issues that we are debating and the Government should take very serious note of what he had to say.
	Perhaps I may also put on record my thanks for the very balanced contribution of the noble Baroness, Lady Uddin. She identified the issues of concern, but she also mentioned the progress that the nation of Bangladesh is making. More importantly, her stand on human rights issues is most welcome. We should be equally grateful to the right reverend Prelate the Bishop of Coventry and the noble Earl, Lord Sandwich, for their contributions.
	Bangladesh has had a difficult birth. It was originally a part of Pakistan, but those two states are now separated by 1,000 miles at the two extremes of the Indian sub-contintent. Bangladesh's struggle to become an independent nation was undeniable—and that is precisely what happened. I do not believe that it is necessary to dwell on history, but suffice to say that the dreams of an effective democracy in Bangladesh have not been fully realised. I had the opportunity to meet Sheikh Mujibar Rahman when he was released from prison in Pakistan and flew to London. He was a man of great stature, who was determined that Bangladesh, with its unique culture, would pull itself from the turmoil of the struggle for independence and build a nation in which the rule of law would prevail.
	I love Bangladesh and have many friends there, and I was deeply touched when I was invited to chair the afternoon session of the European human rights conference on Bangladesh, held last Friday at the University of London, in which my noble friend Lord Avebury participated. It was not an easy job; emotions were running high; and it did not help when people in authority denied that there was any violation of human rights there. As I have always said, if there are issues we should not be squeamish about them but should take the necessary action. With all the evidence available and documented, it was difficult to accept the statements made by some of the officers. Despite all that, it was a good conference with ample opportunity for a constructive approach to problems in Bangladesh.
	But I have another worry. There is a large law-abiding Bangladeshi community here. They have struggled hard to build an economic base and contribute substantially to the revenue in this country. They were the last people involved in large-scale migration to the United Kingdom, and despite adversity they have come out well. They also have close relations in Bangladesh, so we should be mindful that what happens in Bangladesh has repercussions in the Bangladeshi community here. We ignore that at our peril.
	So what are the issues that concern us all? I have studied mountains of documents, and there are matters that need addressing. Briefly, they fall under the following categories: the prosecution of religious minorities, as the right reverend Prelate the Bishop of Coventry, said; extra-judicial executions and custodial deaths; attacks on the media, educational institutions and students; violence against women; allegations of political assassinations; political persecution and torture; evidence of terrorism and growing extremism; and the security and safety of citizens.
	I deplore human rights abuses arising anywhere in the world, because as part of the global community what happens in one part of the world has an impact on all of us.
	I turn now to the plight of the minorities in Bangladesh. In a Written Answer to my noble friend Lord Avebury, the noble Baroness, Lady Symons of Vernham Dean, replied:
	"We are concerned about the increasing level of political and extremist violence in Bangladesh and the dangers this holds for Bangladesh. We raise these concerns and the need for effective action to ensure that those responsible are brought to justice on a regular basis with the Bangladeshi authorities and will continue to do so".—[Official Report, 7/3/05; col. WA56.]
	In a Written Answer to a Question by Jeremy Corbyn in the other place, the Minister, Mr Alexander, replied:
	"We have serious concerns about the security and law and order situation in Bangladesh. The Bangladeshi Government need to take effective action to bring those responsible for violence to justice".
	Mr Alexander added:
	"The large majority of recent attacks have been directed at political and civil society rather than against British or other foreign nationals".—[Official Report, Commons, 4/3/05; col. 1441W.]
	Again, in answer to another Question from Mr Drew on 8 February this year, Mr Alexander replied:
	"We continue to be concerned about the situation of religious minorities, including Hindus and Christians, in Bangladesh. I raised these concerns with the Prime Minister, Khaleda Zia, on 21 December during a visit to Dhaka. We regularly raise issues of religious persecution and intolerance with the Bangladesh authorities, both bilaterally and with EU colleagues. We urge them to ensure minorities are suitably protected, that all incidents are promptly and fully investigated, that the perpetrators of crimes against religious minorities are brought to justice and that firm action is taken against incitement".—[Official Report, Commons, 8/2/05; col. 1453W.]
	So what are these allegations? Let us examine the situation in the context of Hindus, Christians, Buddhists and the Ahmadiyya communities. Religious persecution is having a devastating effect on their freedom to practise their faith. It is damaging their culture, and there are numerous examples of families uprooting themselves from their place of birth. You simply have to look at the exodus from Bangladesh.
	The Amnesty International report dated 1 December 2001 is quite explicit on the subject. It says:
	"The killing of a prominent member of the Hindu community appears to be connected to the current wave of attacks on Hindus. On 16 November, Gopal Krishna Muhri, principle of Nazirhat College in Chittagong, was shot dead at his home. The circumstances surrounding his killing point to the strong possibility that he was targeted because of his identity as a prominent Hindu with a successful career in the educational establishment of Chittagong city".
	There is a continuous flow of refugees who have been forced to leave their homes and property as a direct result of the discrimination and persecution to which they are subjected. There is also evidence of looting, arson and murder aimed at that minority.
	Even more disturbing is the plight of women, who are victims of sexual violence—or rape, gang rape and mass rape. We all know that sexual violence affects not only the victim but the whole family and in many cases the whole community. I shall resist the temptation to cite reports from some eminent and independent foreign journalists and the serious concerns expressed by international human rights organisations, but there are serious allegations that these crimes are the direct results of religious cleansing of the indigenous Bangladeshi Hindus and other minorities.
	The question that we must all ask is why there is a deafening silence on the subject from the authorities in Bangladesh. Why do the Bangladesh Government not institute an independent inquiry into those deaths? Why is there no evidence that perpetrators have been brought to justice? Why is the full protection of the law not afforded to the minorities in Bangladesh? Those are serious questions, to which we need answers.
	It is not only the Hindu community that is the victim—the Ahmadiyya community has suffered the same fate. The campaign of hatred has resulted in attacks on places of worship. Again, I cite the Amnesty International report on Bangladesh, which says:
	"On 31 October, Shah Alam, the Imam of the Ahmadiyya mosque, was beaten to death in front of his family. Some 90 men led by a local Islamist leader attacked him because he refused their demands to recant his Ahmadiyya faith".
	To date no one has been charged in connection with that killing.
	Although there is a constitutional guarantee for freedom of religion and expression, Ahmadiyya literature is still being banned, as my noble friend Lord Avebury said. The Christian community has not been spared, either. A church in Gopalganj was seriously damaged by a bomb blast.
	The constitution of Bangladesh enshrines secularism as one of its main pillars, and did not allow religion-based politics. However, following the death of the founding father, Sheikh Mujibar Rahman, an amendment to the constitution allowed for religion-based politics.
	Some months ago my noble friend Lord Avebury and I had the privilege to meet Sheikh Hasina. She was the Prime Minister of Bangladesh from 1996 to 2001. She is the daughter of Sheikh Mujibar Rahman, the founding father of Bangladesh. She is the current leader of the opposition in Parliament. It is a serious concern that she was a victim of a grenade attack which nearly cost her life. Many were killed on that occasion.
	There have been assassinations of Members of Parliament. First, it was Ahsanullah Master and then Mr Shah Ams Kibria. In the case of the latter it is worth quoting the editor of the Daily Star which stated:
	"The choice of Kibria as the target should not be lost on anybody. He was one of the staunchest voices of secularism and against extremism, terrorism and increasing use of religion in our politics. He was one of the early warning voices against Taliban penetration into our national politics".
	This is a serious comment against a nation moved from secularism to supporting fundamentalism. That is not to blame Islam. It is one of the great religions of the world. Fundamentalism and Islam are incompatible, as demonstrated by a large number of Muslims throughout the world. Equally, the rise in extremism often ignored or directly or indirectly supported by those in power must be a matter of serious concern to all of us.
	Bangladesh started as a liberal, peaceful, tolerant nation but is that the case now? Some of the examples may seem isolated incidents, but the total of more than 165 deaths and more than 1,700 injuries since 1999 cannot be ignored. The Awami League and its supporters have borne the brunt of such incidents. However, it is even more disturbing to find that those figures include leading intellectuals and journalists. There is evidence that over the past eight months 230 custodial deaths, apparently in cross-fire with the Rapid Action Battalion, have been recorded. Again, there are serious allegations of extra judicial executions. Such allegations will gather momentum until such time as they are properly and independently investigated. Already the European Union heads of missions in Dhaka have issued a public statement expressing their "shock and dismay" and their deep concern that the apparent failure to investigate previous attacks had led to a climate of impunity.
	The US Department of State has drawn attention to the failure of the government to bring to justice the perpetrators of acts of violence, fostering an intimidating climate of insecurity and impunity that encourages further attacks.
	Peaceful protests are part of any democratic country but these have been met with violence and brutality. The conference I chaired last Saturday also received information on the repression of non-government organisations in Bangladesh. The NETZ Partnership for Development and Justice is a German NGO specialising in Bangladesh since 1979. It is supporting 10 NGOs in development work. I am informed by Ingo Ritz, the executive director, that NGOs in Bangladesh are facing serious threats. The government do not allow NGOs to work or hinder their work. Additionally, there were attacks on the offices and six co-workers were injured. A fundamentalist group is claiming responsibility for that.
	It would be easy to blame the government of Bangladesh for all this. What is required is a very clear independent investigation to get to the root of why such violence occurs. The country's non-governmental organisations are among the most active in the world and successive governments have developed effective partnerships with them to improve services to the poorest people. It is a tragedy that some of the NGOs are the targets of repression.
	The British Government should bring pressure on the Bangladesh Government to investigate and prosecute criminals responsible for violent attacks and grenade blasts on leading members of the opposition, the British High Commission, arts and cultural events, members and institutions of religious minorities and secular groups.
	In essence the world community cares about a genuine democracy in Bangladesh. That democracy can survive only if the rule of law prevails and there is a halt to the abuses of human rights quite rightly mentioned by the noble Baroness, Lady Uddin.
	We all have a responsibility to ensure that the Bangladesh Development Forum concentrates on good governance and maintenance of a stable democracy based on respect, dignity and freedom for all its citizens. The country has gone through some turbulent times. It cannot afford to sacrifice its founder's dream of a truly democratic society. We want a healthy, prosperous Bangladesh. It has to confront its own problems if it is to regain respect in world politics.

Lord Triesman: My Lords, I start with a heartfelt word of apology for arriving after the beginning of the debate. I was at a G8 preparatory meeting on debt and trade and word arrived slightly too late, despite my efforts at athleticism, for me to be here right at the beginning. I particularly regret it because I would not want any sense of discourtesy to the House, and least of all to the noble Lord, Lord Avebury. Let me just say at once that I apologise for that.
	I am most grateful to the noble Lord, Lord Avebury, for giving the House the opportunity to discuss the situation in Bangladesh. His energy and commitment in defending human rights and campaigning against religious persecution are second to none, as the noble Lord, Lord Dholakia, rightly observed. I hope that the House will not feel that the issue is not also close to my heart. I am grateful to all noble Lords who have taken part in the debate.
	I shall start with the first issue of substance. It is to do with the meeting held at SOAS, which was raised by the noble Lord, Lord Avebury. The High Commissioner saw a senior official in the department shortly before the conference. We took the view that it was a private event. We will always support meetings within the law and academic life, and the FCO was interested in events. I am glad to say that the High Commissioner ensured his attendance and tried to come to grips with some of the issues rather than protesting. We were glad that the government of Bangladesh were represented in that way at that meeting.
	Let me say a few words about our relationship with Bangladesh. Britain and Bangladesh have been partners for centuries in politics, trade, and cultural and social interchange. That partnership is growing right across the board. Our trade with Bangladesh is growing. Bangladeshi exports to the United Kingdom in 2004 were up more than 10 per cent at £635 million. UK exports to Bangladesh also grew by 20 per cent. The United Kingdom remains Bangladesh's single largest investor.
	Britain is also in the forefront of Bangladesh's efforts to help to combat poverty and meet the millennium development goals. We are Bangladesh's largest bilateral development aid donor. Our development programme rose to £125 million in 2004 and a similar figure is planned for 2005. I hope that we will be counted as a friend in need: the United Kingdom contributed £29 million to relief efforts following the terrible floods in 2004. In regard to that appalling natural event, I acknowledge the sterling efforts made by my noble friend Lady Uddin, and the generosity of the British-Bangladeshi community.
	Even more importantly, the links between our people are deep, forged not least by a vibrant British-Bangladeshi community. Cultural, religious and linguistic contributions are invaluable to a multicultural society. We are friends of long standing with a broad and dynamic relationship. Of course, however, there are issues of concern that noble Lords have rightly raised.
	As noble Lords are aware, Bangladesh's early history was difficult and marked by tragedy, with a bloody liberation war, famine, assassination, coups and military rule. My noble friend Lady Uddin mentioned some of those. But the struggle for freedom and democracy achieved a hard-won multiparty system in 1991, and there have been two peaceful transfers of power since. It is a relatively short time, but there has also been tremendous economic and social progress, including food self-sufficiency, a dramatic fall in population growth, improved access to education—especially for girls—increased economic diversification, and recent economic growth at more than 5 per cent per annum.
	Bangladesh has also seen a flowering of civil society. The noble Earl, Lord Sandwich, made particular mention of the microcredit organisations, which are world leaders. I am proud that DfID has taken a role in helping to establish them. Bangladesh also has a free and vibrant press, which is to be cherished. Of course, dangers and threats to it are not acceptable. They should not be tolerated, and we will raise the issues that have been identified by the noble Lord, Lord Avebury, with the Bangladeshi authorities.
	As a whole, there have been tremendous achievements of which all Bangladeshi people can be proud, as the noble Lord, Lord Astor, said. They provide many of the prerequisites for a democratic and prosperous society, and we all want to see that in Bangladesh. Precious gains that must be safeguarded have been achieved in a difficult environment.
	Bangladesh's elected leaders have a leading role to play. The divisive relationship, to which many noble Lords have referred, between the two main political parties affects all aspects of the way in which Bangladesh is governed. The noble Lord, Lord Astor, emphasised the point a few moments ago. Politicians need to demonstrate more clearly a commitment to democratic values and institutions which rise above party-political divisions and meet the aspirations of the Bangladeshi people. Constructive dialogue between the main parties is essential for the proper running of any parliamentary democracy, and Bangladesh needs it urgently.
	I also take note of the reports from Amnesty International. They are telling. On one side, there are positive steps in anti-corruption, but on the other, some elements in the regime of law make democratic life extremely difficult. We stand ready to help in any way in which we can.
	Bangladesh will have parliamentary elections by January 2007, crucial tests of its democracy. Successful democratic elections will require a genuinely level playing field, full participation by all parties and a peaceful and efficient voting process. We urge all sides to commit themselves to that, and to make the compromises necessary to achieve it. We and others in the international community are ready to help.
	It is not always easy, and perhaps not always useful, to make a distinction between political violence and terrorism. It is sad that the history of Bangladesh contains instances of political violence, and the noble Lord, Lord Avebury, is right to highlight the instances of violence over recent years, as have other noble Lords, including the noble Lord, Lord Dholakia. As a friend of Bangladesh, we are seriously concerned by the law and order situation generally, and especially by the series of seemingly similar attacks on senior political targets.
	The 21 August 2004 grenade attack on the rally in Dhaka of the opposition Awami League was an attack on Bangladeshi democracy itself, as were the murders of the widely-respected former Finance Minister, the opposition MP and their colleagues. The only possible response to such attacks is outright condemnation and a determination to bring to justice those responsible. My right honourable friend the Foreign Secretary wrote to the Bangladeshi Prime Minister after the 21 August attack calling for a transparent and credible investigation to bring the perpetrators to justice. My right honourable friend Douglas Alexander raised the lack of progress in the 21 August investigation with the Bangladeshi Prime Minister when visiting Dhaka in December 2004. He spoke also to the leader of the opposition.
	We are trying to assist the investigations, through our High Commission in Dhaka and in whatever other ways we can. Specialist officers of the Metropolitan Police also visited Sylhet shortly after the attack on the British High Commission, to assist the Bangladeshi police with their investigations. A second visit to Bangladesh was made in July. They have continued to provide assistance to the authorities there. The Bangladeshi Government have not requested assistance from us in any other investigation.
	The Bangladeshi Prime Minister gave a personal undertaking to Douglas Alexander that the investigations into the attacks would be pursued to a conclusion. Although there has been some progress in other investigations—there have been arrests and other prosecutions—we regret that, to date, nobody has been arrested or prosecuted for the 21 August attack. I shall make what we are doing clear to my noble friend Lady Uddin. We will continue to make it clear to the government of Bangladesh how essential it is to demonstrate to the Bangladeshi people and to the international community that they are doing everything in their powers to bring to justice all those behind the attacks, whoever they may be. To avoid a climate of impunity, justice needs to be done and seen to be done.
	Extremism was described in the debate as a cancer, and I agree. Bangladesh is not immune from terrorism. No country is. However, it is also right to acknowledge the contribution that the country has made to UN peacekeeping. Bangladeshi troops wearing blue berets stand in the way of extremism in many difficult parts of the world. However, like other countries, Bangladesh must face the dangers posed to it by domestic and international terrorism, and take decisive action to tackle them. The noble Lord, Lord Avebury, is right to suggest that there has been some worrying extremist activity recently, of which the examples in journalism are among some of the most significant.
	We welcome recent acknowledgements by the Bangladeshi Prime Minister and other senior Ministers about the dangers posed by terrorism. We also welcome some positive steps such as the banning of two extremist groups in February 2005 and the Bangladeshi Government's commitment to sign all UN counter-terrorism conventions. We look forward to the required legislation being passed soon by the Bangladeshi parliament. The UK and other international partners are already working with the Bangladeshi authorities to try to improve their counter-terrorism capacity. We will assist further.
	At the base of all of this is the need for respect of human rights. Whatever the motivations of those who carry out criminal acts, it is incumbent upon any government to apply the law. There are worrying indications that the Rapid Action Battalion and the police in Bangladesh are not always doing so. The noble Lord, Lord Dholakia, emphasised our anxieties and I agree with him that the RAB causes anxiety. There is a need for a clear investigation and prosecutions as necessary. We look to the Bangladeshi Government to see that their security agencies are fully accountable.
	The attack in Sylhet in May 2004, in which our High Commissioner to Bangladesh, Mr Anwar Choudhury, was injured and three people were killed, was a shocking event. I believe that noble Lords will want to join me in acknowledging Mr Choudhury's courage in returning to his post so rapidly and, more widely, to recognise the courage and dedication of many of our diplomats working in dangerous environments around the world.
	Specialists from the Metropolitan Police were deployed to Bangladesh immediately after the attack. We are disappointed that the investigation has not yet led to the arrest and prosecution of those responsible. It will remain at the very top of our agenda in all our high-level contacts with the Bangladeshi Government. The investigation must be pursued to a conclusion and those who died deserve no less. The noble Earl, Lord Sandwich, reminded us that paramedics and people working with the NGOs also lose their lives. Those investigations are equally important to us and must be pursued.
	I want to turn to religious intolerance and violence. Bangladeshi society has a history of moderation and tolerance. The vast majority of Bangladeshis are strongly opposed to religious extremism. Sadly, there is evidence of intolerance. As the noble Lord, Lord Avebury, and the right reverend Prelate the Bishop of Coventry have rightly pointed out, sadly, there is considerable evidence of intolerance against minorities. The situation of the Ahmadiyya community is a pertinent example. There can be no excuse for the organised intimidation against that peaceful community which has taken place over the past two years. Drawing on a phrase used by the right reverend Prelate, there is no such thing as the obscure persecution of an obscure group. It touches us all and it is fundamental to civilised life.
	I feel that strongly. My mother's family were encouraged to leave Spain in 1492 in circumstances which meant that those who survived were then encouraged to leave almost every other European country. Such intolerance against religious groups frequently leads to the most excessive violence and murder that is experienced in the world. We all have the deepest commitment to ensuring that it is stopped.
	I assure the right reverend Prelate that we regularly seek to highlight this issue and to support the rights of Ahmadis and other minorities and have lobbied extensively in that regard. The British High Commission in Dhaka maintains close contacts with the Ahmadiyya community. The European Community will be closely involved. The local EU presidency raised the situation with the home Minister in May. The European heads of mission demonstrated their solidarity in late 2004 by visiting an Ahmadiyya mosque under threat from the extremists. Such support will continue to be visible.
	On occasions, the Bangladeshi police have prevented violence but the authorities have too often shown too little determination to stand up to the extremists. The moves to ban Ahmadiyya publications was a particularly regrettable example. We will continue to encourage the Bangladeshi authorities to take a proactive and unequivocal approach to meeting their constitutional and international human rights obligations to all minorities. I will certainly look at the suggestion made by my noble friend Lady Uddin for parliamentary contact and visits. Transparency in governance and debt relief all hang together.
	Several other questions were raised and I touch on them briefly. The situation in the Rohinga refugee camps is being raised by the British High Commission. We have taken a close interest, with the support of the UNHCR. Officials have visited the camps on several occasions and it is my understanding, which I will confirm, that they will continue to do so. It is a difficult situation to resolve, but we are encouraging the government of Bangladesh to be flexible in their resolve and to deal with the situation with the appropriate levels of attention.
	I was also asked by the noble Earl, Lord Sandwich, to comment on the Government's assistance to the Biharis. We are well aware of their problems and we recognise the historical context. However, essentially this is an issue for the governments of Bangladesh and Pakistan. We are encouraging them to come to a long-term resolution, because that is obviously what is now needed. I am pleased to confirm the noble Earl's understanding that the British High Commission is implementing a project and I will write to the noble Earl with further details on how it is progressing.
	I was asked by the noble Lord, Lord Astor of Hever, to comment on the rights of the Chittagong Hill Tracts. We again look to the Bangladeshi Government to implement in full the 1997 peace agreement in full consultation with local communities. We welcome that peace accord, which ended large-scale violence in those hill tracts. We are disappointed that there has not been the progress and implementation we would have all wished. We raised the issue and we will continue to do so. We are encouraging the government to implement the agreement fully. We will stay in close contact with the representatives of the Chittagong Hill Tracts and we will support the work of the United Nations Development Programme.
	The theme that has run through this important debate is that a threat is consistently posed to the rule of law in Bangladesh. So much of it comes down to the stability of the rule of law, which is an essential underpinning of any democratic society. The UK is working actively in Bangladesh to strengthen the rule of law in practical ways. It is working with the government and with civil society. I can tell the noble Lord, Lord Astor, that the Department for International Development is providing £5 million over the next three years to a major UNDP-managed police reform project, for which he rightly called, in conjunction with the government of Bangladesh. We are also supporting local NGOs engaged in developing alternative dispute resolution. This innovative approach is beginning to produce results.
	Security concerns have damaged Bangladesh's reputation. All nations rely on having a good reputation. It is all the more reason why we need to deepen our engagement with that country and to continue our work to support Bangladesh's continued economic and democratic development. We most certainly will do so.

Lord Oxburgh: My Lords, I begin by thanking the right reverend Prelate the Bishop of Liverpool. He was successful in the ballot for a debate but, as it turned out, our debate on a related topic had been arranged for the same afternoon. He kindly agreed that the two Motions should be debated together.
	We have waited a long time for this debate and we have the unusual but, in this case, welcome innovation of two government replies to our report: one after six months, which was, in the committee's eyes, seriously incomplete, and a more considered reply six months later. We are grateful for that, but I saw it for the first time only on Monday and the committee has not yet considered it.
	Today's debate will be broad, not only because of the parallel Motions, but also because so much has happened in the past 12 months. There is now wide acceptance of the reality of anthropogenic climate change and the need to take action urgently. We have had a period of sustained high oil and gas prices which, short of a major world recession, seem unlikely to fall a long way any time soon, substantially improving the economics of renewable energy. We have seen the introduction of the European Emissions Trading Scheme and we have a new Government. We are delighted that the need for a Minister who can devote his whole attention to energy is accepted.
	This is not a debate on climate change. However, some noble Lords may feel that the unwillingness of the Government of the United States to accept the judgment of its own prestigious National Academy of Sciences—not to mention those of every other national scientific academy in the world, including our own Royal Society—means that this is not an urgent matter. I shall, therefore, comment very briefly.
	I am not a climate scientist but I have worked for many years in closely related areas. I can say only that the prediction of the Nobel Prize-winning chemist Arrhenius in 1903, that the burning of fossil fuels would increase the carbon dioxide content of the atmosphere and cause the Earth to warm, looks incontestable. There is uncertainty about how fast the temperature will rise and about details of climate change, but the overwhelming probability is that the Earth will become a less hospitable place for its current inhabitants. It is the speed of the change that will make it hard for us and many other species to adapt.
	Among human populations, those living in the poorest countries will be at the greatest risk. In that way, the Government's agenda for Africa and for climate change are closely linked. I am happy to congratulate the Government on the firm stance they have taken on climate change and the priority they have accorded it for their presidency of the G8 and the European Union.
	Our report addressed one element of the Government's energy policy as outlined in the 2003 White Paper; namely, the intention that by 2010, 10 per cent and by 2020, 20 per cent of our electricity should be generated from renewable sources—that is from wind, waves, sun and the other intrinsic Earth processes, or from plant life or organic wastes. I wish to record my thanks to our committee who devoted so much time to this inquiry.
	That said, we remain puzzled by the introduction to the White Paper in which the Government list their desiderata: security of energy supply, reduced greenhouse emissions, competitive energy markets and elimination of fuel poverty. But they are unwilling to prioritise them. They include the important social objective of reducing fuel poverty. Surely this can be met more readily in other and, dare I say, more rational ways. The White Paper also involves a curiously eclectic application of market forces.
	The Government have initiated a review of the Climate Change Programme and of the renewables obligation certificate, the so-called "ROCs scheme". In our report, we were critical of that scheme, but let me say that, whatever its deficiencies, it is much better than nothing. It has achieved results.
	We were concerned about it for two main reasons: first, it was intrinsically incapable of achieving more than 60 to 70 per cent of the Government's target. Secondly, although nominally technology-blind, it could be attractive only to those deploying the imported technology of wind turbines because our indigenous research base in other relevant technologies was at such a low level. That remained true even after the ROCs scheme was extended to 2015. But, although the scheme is less than perfect, investor confidence must be maintained by not changing conditions that affect those who have already invested.
	Another problem is that soon the commercially attractive renewable energy schemes will have been completed. On the other hand, as time goes on, the returns of the ROCs scheme will decline and the incentives for the new, more costly schemes will progressively diminish. Offshore wind installations cost about twice as much as those onshore, which is rather more than originally thought. At this point, I have to declare an interest as chairman of the Shell Transport and Trading Company; the Shell Group is involved in many wind projects.
	At this point, it is possible to offer a suggestion. It originates neither from Shell nor the committee. Rather than extend the ROCs scheme as it exists today until 2020, as has been suggested, it could be slightly modified for future investors while keeping conditions unchanged for existing ones. The current renewables obligations that have been placed upon suppliers of electricity for 2010 and 2015 would remain unchanged and an additional obligation for 2020 would be added. However, only renewable energy produced from generation plant commissioned after, say, 2008—to give 12 years of renewables obligations—would be eligible for future buy-out fund payments. Renewable obligations certificates would carry a date stamp that would qualify them to receive payments from the respective buy-out funds for the applicable period. Suppliers of electricity to consumers would still have their targets to meet until 2020, and would have to buy-out their obligations if they did not, but after 2015, they would receive buy-out fund payments only for newer projects that have generated ROCs eligible for that period.
	This would limit the cost of electricity, direct future payments to where they would do most good, not affect the conditions under which existing investors invested, and so on. It would also allow the Government to continue to extend the renewables target to deal with the longer-term carbon reduction plans without disrupting the investor confidence by changing the system.
	A different difficulty arises from the structure of the electricity industry. Annual payments from the ROCs buy-out fund go to electricity distribution companies that buy electricity from generating companies at fixed prices under long-term power purchase agreements. Therefore the high incentives provided by the ROCs scheme when the Government's targets are not reached, do not readily feed through to those who can build new plant—at any rate not readily, transparently or sufficiently promptly to affect their market behaviour. This problem too would be slightly mitigated by the proposal I made earlier.
	Pressure of other commitments has prevented me examining in detail the Government's more considered reply. I am glad to see that in a number of cases the Government accept our recommendations. On the matter of whether the renewables target for 2010 will be met, frankly, it is now neither here nor there. The die is cast and, in any case, I believe that there is now a widely held view that national energy policy has to be revisited.
	I looked at the later paragraphs in the reply concerning security of supply, and I am frankly dismayed by the blind faith in markets. It could be described in chemical terms as a failure to distinguish between thermodynamics and kinetics; that is, between what should happen and what will happen. It is probably true that markets will ultimately correct any imbalance between supply and demand. But the reply fails to recognise that there invariably is a time delay. If the market is for baked beans, that may not matter too much, but for an essential infrastructural service, it does matter; the lights must not go out. I expect that the committee will wish to pursue this matter further.
	I now turn to the use of biomass as a renewable resource, partly because in this area we found multiple regulatory bodies whose terms of reference and priorities were imperfectly aligned. Furthermore, they were not aligned to support broader government energy policy. This led to operational nightmares for the firms concerned. We look forward to the report of Sir Ben Gill's working party, which has been set up to look into these problems.
	Biomass—plant matter—may either be directly burned in power stations or be used to make liquid fuels. Because plants extract carbon from the air, when they are burned it is returned to the air and the energy derived from them should be carbon neutral. However, care is needed because energy is required to cultivate, fertilise and transport biomass, and one can end up using almost as much energy to produce the fuel as one gets out of it.
	For some time, biodiesel has been made from vegetable oils—linseed, rape and so on—while the petrol substitute, ethanol, can be produced by the fermentation of plant sugars from sugar cane, sugar beet or corn heads. In the past, these products have been more expensive than their fossil fuel equivalents, but recent rises in oil prices have reduced the difference and I believe that last month corn ethanol in the US was briefly cheaper than gasoline.
	The cost of these fuels is high not only because of the labour and energy needed to produce them, but also because only a small fraction of the plant is used for fuel and the rest is wasted. However, a small Canadian enzyme company, Iogen, has shown that this does not have to be so. It has developed an enzyme that will break down straw into its constituent sugars and it is now, in collaboration with Shell, making an ethanol fuel from what was previously a waste product. Industrially this process has much more in common with whisky making than oil refining: it is fermentation followed by distillation. In full production, it will be significantly cheaper than today's oil. Producing liquid fuel from waste is a great step forward. The processing itself has low additional energy requirements and waste straw is already collected and moved. That means that the fuel is effectively emissions-neutral. It is known as Ecoethanol to distinguish it from corn ethanol that carries around 75 per cent of the emissions from the gasoline that it can be used to replace.
	The message again is clear: we must look carefully at the emissions capability associated with any particular renewable source. But this technology opens the door to the production of fuel from plant-derived wastes and from the organic elements of urban waste of all kinds. But perhaps more importantly, it opens the door to the co-production of food and fuel, avoiding very uncomfortable competition between the two. Ultimately, this approach may offer the possibility of sustainable transport.
	If human life is to continue on this planet, we have to find renewable, secure and sustainable energy sources. Stocks of fossil fuel are, by their nature, finite, although we have no alternative to continuing to use them for some time. But we must recognise that this is a stopgap measure. There are promising advances, but the contribution from many renewables is limited simply because our technology is at the present time too primitive to exploit them fully. I beg to move.
	Moved, That this House takes note of the report of the Science and Technology Committee on Renewable Energy: Practicalities (4th Report, Session 2003–04, HL Paper 126).—(Lord Oxburgh.)

Baroness Sharp of Guildford: My Lords, I think that I am the first member of the committee other than the noble Lord, Lord Oxburgh, to speak in this debate. I would like to thank him for his chairmanship of the committee, which was admirable, and I thank the right reverend Prelate the Bishop of Liverpool for coming together with the noble Lord, Lord Oxburgh, to initiate this debate. I would also like to thank the clerk to the committee, Chris Johnson, and our two specialist advisors—Professors Anderson and Elliott. Together, we put together a very powerful report, which has already had quite a considerable influence on government policy.
	As all noble Lords who have spoken have made clear, the focus of this report on renewable energy emerged from the White Paper and from the urgency of the agenda for climate change. As the noble Lord, Lord Oxburgh, indicated, if this planet is to survive we cannot go on as we are. We have to cut back on carbon emissions and greenhouse gas emissions.
	It is very depressing that at present, if we look at the figures for carbon emissions, this country has been increasing them, rather than decreasing them, over the past few years. Yes, we have met our Kyoto targets, but we met those in the 1990s with the shift from coal to gas. Now, partly because of the very fast rise in transport emissions, total carbon emissions in this country are increasing.
	That increase reinforces our call in the report for the development of carbon-free technologies such as wind, tidal and solar power—which admittedly when one counts in the initial capital investment are not totally carbon free, but are so when working—and the carbon-neutral technologies of biomass energy. In the growing of biomass crops, the carbon being emitted is consumed.
	While the target priority must lie with cutting carbon emissions, other greenhouse gases are also important. I refer to coal mine methane emissions, which I believe the noble Baroness, Lady Platt, will talk about at greater length. Methane is 64 times more powerful in its emissions than carbon. That indicates why energy efficiency is so important. As the noble Lord, Lord Whitty, pointed out, the more we can cut back on our use of energy, the better. Many savings can be made through greater efficiency. It is the subject of the report the Committee is currently working on and which will be published before the House goes into Recess in July. It develops and carries forward themes in the current report.
	An issue that concerned us is the diversity of energy supply. The shift to gas means that we shall be very dependent on imported supplies from distant countries with unstable regimes. So the push towards renewables is urgent and in that regard it is clear that the committee has been critical of the Government not only for not placing enough priority on the push to renewables, but also for putting all their eggs into one basket, that of wind power. We have heard already the speech of the noble Earl, Lord Selborne, about biomass energy, and other noble Lords will talk about tidal and wave power. I also want to pick up on the noble Earl's remarks about microgeneration. It is an important means by which we can move quickly to make carbon emissions savings.
	I was pleased to note that the right reverend Prelate picked up on the issue of R&D spend. Yes, to their credit the Government have increased the annual spend on R&D from £40 million to £70 million, but if this issue is of the highest priority, is that really enough? I shall be interested to hear what the Minister has to say.
	The title of the report concerns the practicalities of renewable energy. By how much are the Government's targets practical? They are a 2010 target of a 10 per cent renewables contribution to electricity generation and the "aspirational" target of 20 per cent by 2020. We cast particular doubt on the 2010 target. The figures we had at the time showed clearly that in 2003, something like 3 per cent of our electricity was being generated from renewable sources, but half of that percentage came from hydro power and landfill which, under the renewables obligation, are not directly accountable. Only 1.5 per cent came from acknowledged renewables obligation sources.
	The figure given by the DTI for 2004–05 is 2.8 per cent. We must give credit for the gains made over the past couple of years and accept that the percentage is 2.8 per cent this year. But only 25 per cent of it comes from wind power. In their response, the Government placed a lot of emphasis on the 50 megawatts of new wind power that they expect to see installed during this year. So if 25 per cent of the percentage comes from wind power, it means that currently wind power makes a contribution of 0.7 per cent. Doubling that by the end of 2005 or the beginning of 2006 would take it to 1.4 per cent. Planning consents already in hand look like more or less doubling the percentage again. Over another two years, by 2008 we will have reached 2.8 per cent. But even if we add in the extra margin from other renewable sources, that is still a very long way off the target. We will have only two years in which somehow to make the leap from a renewables supply of somewhere in the region of 4 to 5 per cent up to that 10 per cent target. In spite of the Government's faith that they will meet the target, there are real doubts about it.
	I am glad that the noble Earl, Lord Selborne, mentioned Woking. What is being done there with CHP—a scheme based not on incineration but on gas—with the by-product being electricity—is good work. The electricity is sold to low-income people in the area and is run on a private network. That private network was a limitation. One of the barriers was that there could be only 3,500 subscribers to your private network. When we said that that was silly, and that the scheme should be expanded, the Government stated:
	"If the Committee's recommendation were implemented, there would potentially be tens of thousands of domestic consumers on unlicensed distribution networks without regulatory protection and without access to the competitive market".
	That is tantamount to saying that private consumers who pay 9.5p per kilowatt hour for their electricity would be pleased to know that they were benefiting from competition and not locked into a single supplier who was charging them 7p per kilowatt hour—which is what Woking is charging its users. Is that promoting competition?
	The other limitation is the question of tariffs—that when you generate your own electricity and put it into the grid, you receive the wholesale price of about 2p per kilowatt hour, compared with 9.5p. In Germany, it is the other way round. For every kilowatt that you put into the system, you are paid roughly four times the consumer price. Some of you who have travelled in Germany may have noticed that little windmills are sprouting up on many chimneys for precisely that reason. Some German commentators to whom we spoke felt that some uneconomic investment was taking place.
	Nevertheless, there are many technologies which we, as consumers, could invest in now. For example, a mini windmill can generate enough electricity to cope with standby power requirements, such as those of a refrigerator. Similarly, passive solar energy to heat water and solar panels on the top of office buildings to supply air conditioning are used in Woking. All of that represents unexploited potential. It is an area that we should examine in more detail and develop. I should be interested to hear what the Minister has to say about today's announcement that the Government are pushing forward on that front and precisely what they are planning to do.

Lord Methuen: My Lords, I, too, would like to thank the noble Lord, Lord Oxburgh, for his very capable chairmanship of our committee, and for introducing the debate on the report. I thank the right reverend Prelate for his Motion.
	None of us is in any doubt about the reasons for cutting back on emissions due to energy use. I for one read the recent interview with the noble Lord, Lord Oxburgh, in the Guardian newspaper with great interest. It is depressing to note his conclusion that even if we achieve the Government's targets for the reduction of CO2 emissions by 2020, our good efforts are likely to be swamped by the emissions of energy hungry developing nations, particularly India and China, as other speakers have said.
	We published our report this time last year. The initial government response was weak and the revised government response is welcome.
	I had the privilege of being a member of EU Sub-Committee B when it reported on renewable energy in 1999. On both occasions that we visited Denmark it was interesting to note the change in the attitude of the Danish Government to wind energy. The previous Minister had been a very powerful character in its promulgation but that is not the case with the current government.
	The remit of our committee was to look at the practicalities of the Government's programme for renewable energy. There was almost universal disbelief on the part of those we spoke to in our ability to achieve the ambitious targets that the Government had set. The only mature technology capable of meeting those targets is obviously wind power. However, the visit to Woking showed what could be achieved by large-scale use of photovoltaic and other means by a committed public body. It was also interesting to note that at one point there was a major power failure in Woking and Tesco had to shut down for a considerable period at very considerable cost. However, the Woking borough offices and its customers continued to operate quite happily.
	As the right reverend Prelate pointed out, energy efficiency, its use and conservation must not be ignored. A recent Written Answer by the Minister to the noble Lord, Lord Dixon-Smith, emphasises the discrepancy between the thermal energy inputs and electrical energy outputs of our power stations. This indicates a thermal efficiency of about 38.7 per cent and a corresponding wastage in excess of 60 per cent.
	CHP systems, where practical, can raise the thermal efficiency to more than 70 per cent. Our take-up of CHP in this country is pathetic compared with our European counterparts, and the Government should do much more to encourage CHP schemes in our major urban areas where they are practical.
	Regarding our report and the revised government response, I am glad to see that they welcome many of our proposals, and that they have moved to tackle some of the obstacles to the achievement of their targets. The planning regime, the need to enthuse the local populace—perhaps by beneficial pricing due to the lack of transmission costs—and the need to satisfy MoD safety concerns, are critical. I am glad to note in the Government response that the MoD has become less dogmatic in its opposition to wind farm schemes.
	Large-scale offshore wind farms, such as the committee saw at Horns Rev in Denmark, are an obvious solution, and it is good to note that similar developments are now coming on-line in the UK. It is also welcome to note that the Swansea Bay tidal lagoon system is being more actively considered. R&D funding is vital for the less mature technologies, and I welcome the £500 million to be spent between 2002 and 2008, as the right reverend Prelate mentioned. Will the Minister elaborate on how, and on what technologies, that money might be spent?
	I am particularly interested in marine systems for power generation, but as an engineer I am highly sceptical of the long-term viability of reciprocating wave generators in a harsh marine environment. However, I welcome the other initiatives in the marine sphere and the ongoing research into them. I still have concerns with system stability and the position of the distributed network operators with substantial distribution generation at the local level. There must be technical limits, at about 20 per cent penetration of wind power, due to the type of generators used. There is also the requirement to maintain security of supply on occasions in both winter and summer when there is no wind. That has been touched on by other noble Lords.
	That implies that for security of supply we must have other reliable base load generation currently filled by our existing coal, gas and oil-fired power stations and the 22 per cent input from the existing nuclear power stations. The progressive closure of all our coal-fired power stations and the closure of all nuclear generation by 2023, except for Sizewell B, will leave us almost totally dependent on oil and gas imports from Russia, the Ukraine, and other states that may not be as politically stable as we are. Not only that, but for Russian gas we shall be at the end of the pipeline, and anyone else on the other end can turn it off and we will get none. Furthermore, we shall be competing in an increasingly competitive marketplace for diminishing supplies at an increasing price, which must in turn substantially raise our generation costs.
	For the UK to abandon nuclear electricity generation in that scenario is madness. Renewables can supply only a minor portion of our requirement, and nuclear is the obvious candidate for base load generation. New designs such as the BNFL Westinghouse AP1000 reactor are now ready for exploitation, but I understand that there is a serious risk of the intellectual property rights for that design being lost to the UK and sold to the US, thus losing the benefits of our accumulated design expertise. Will the Minister comment on that?
	A balanced energy policy with a diversity of reliable energy sources is essential for the future of our country. Due attention must be paid to energy conservation and efficiency, not only in its domestic and industrial use but also in transport, an area in which we have done much too little.

Lord Winston: My Lords, I was sorry to hear that intervention from the Front Bench, as this is possibly one of the most important debates that we could have at this time. It is really rather shocking that it has been limited to three hours, when so many experts have spent the best part of a year considering an issue facing not only our society but that of the world.
	I am grateful to the noble Lord, Lord Oxburgh, for his excellent chairmanship of the committee, and for the expert advice of Professor Dennis Anderson and Dr Chris Elliot, who were immensely helpful during the preparation and maintenance of our inquiry. I also want to draw attention to the Select Committee's report of 2000, chaired by the noble Lord, Lord Jenkin, Science and Society. He drew attention to something of extreme importance to our deliberation. That is that we face a growing suspicion of technology in Britain. The 1999–2000 report was effectively stimulated by the crisis over CJD, but since then we have had the triple vaccine, problems over nuclear waste—which are not being effectively answered by government—foot and mouth disease and many other scientific issues.
	Among the most important scientific issue ever to face our society is global warming. In fact, at a science conference for the public just a week ago in Cheltenham—the science festival—the government's chief adviser, Sir David King, suggested that it was the most important crisis facing the world today. It was interesting to see how many of his audience, all lay people, agreed with him. I am very glad that the noble Lord, Lord Chorley, and my noble friend Lord Haworth have already drawn attention to this problem, but I want to draw attention to only one paragraph in our report. We recommend to the Government themselves to initiate and promote full and public dialogue both at national and local levels on the advantages and problems of renewable energy.
	Frankly, the government response to that small but essential paragraph is lamentably poor. The DTI refers us to its website, "It's Only Natural", at www.dti.gov.uk/renewables. I suspect that few people in the United Kingdom would bother to dial up that website, to which I shall return in a second.
	Although people now generally agree that global warming is a problem—incidentally, at the Cheltenham science festival, on a vote, 92 per cent of the audience recognised it is being very important, probably as important as any other scientific issue facing us—and that was before Sir David King spoke and that non-scientific audience had had a chance to hear what he had to say. It was also interesting that more than 50 per cent of that audience—as I have seen at other science festivals—supported nuclear power.
	By comparison, almost 80 per cent—as the Government have reported from the result of their MORI poll—are in favour of wind power. But once deliberation went to the understanding of wind power, it was clear that few members of the public have a clue what are likely to be its real disadvantages and limitations, as we have heard so eloquently described this afternoon.
	My noble friend Lord Whitty, in his brave speech, if I may say so, said something very important. He said that behaviour will not change of itself. He called for more regulation, for fiscal methods, market changes and so on, all of which I think are absolutely correct if we are to have better energy efficiency and use of power and some way out of the morass that we face.
	However, for that to be accepted, we must also have public engagement. As far as I can understand it, the Government's idea of public engagement is a kind of loose communication typified by the website. The website features four areas of public news. In the "events" section, it draws attention to conferences; trade promotion service events; the Regional Heartlands pilot tour; and the renewable energy science quiz. The website mentions, I think, five events—one in London, one in Aberdeen this year, one in Paris, one in Germany and two in China. In the trade promotion events section, which will be of limited interest to the public anyway, it lists one in England, one in Aberdeen, two in China, one in France, one in New York, one in Malaysia and one in Toronto. When you click on "Regional Heartlands Pilot Tour", the website tells you:
	"The DTI renewable energy tour is now over. Please check this page regularly for further information".
	That message also applies to the renewable energy quiz science venue tour.
	I am afraid that we are not taking public engagement seriously, and that is a good example. In any case, engagement does not mean just simple education by communication; it means listening to the response of the public. It is not a cheap endeavour; it requires expertise. At present, we are not having any dialogue. We are having very limited communication and, above all, the Government have taken no steps, as far as I can see, to measure the impact of what they are doing in public education.
	We need to tackle the issue in the schools. This year, I have given talks in, I think, 18 or 20 schools to pupils of all ages—from primary school to A-level—so I think that I know something about what I am saying about science understanding. It is clear that children learning from the national curriculum have no concept of the disaster that might face them in two or three decades' time. That is our responsibility, and it is what the Government must focus on and come to terms with, as they speak to and listen to the public.

Lord Dixon-Smith: My Lords, I join other noble Lords in thanking the noble Lord, Lord Oxburgh, and the right reverend Prelate for initiating this debate. Energy policy, if it is driven by anything nowadays, must be driven by sheer necessity, if we wish to do anything about climate change. It was a particular pleasure this afternoon to hear the noble Lord, Lord Whitty, with whom I have argued on so many occasions, and to find myself, for once, in wholehearted agreement with him.
	We already have a deep problem in this country. We have moral pretensions to lead others on this issue. I would not have a problem with that, provided that I felt that we were genuinely leading. The awful truth is that, only two days ago, a press release from the European Environment Agency showed that carbon dioxide emissions increased throughout Europe in 2003 and that the largest contributor to that was the United Kingdom. We cannot hold our head high in the international forum, if that is the situation.
	I hope that the noble Lord, Lord Oxburgh, will forgive me if I concentrate my remarks on the right reverend Prelate's proposition. I have had the privilege of serving on the Science and Technology Select Committee; the committee members develop an expertise that I have no pretensions to keep up with. However, there is congruence.
	The first point that I want to make concerns an installation called the South East London Combined Heat and Power plant. It is a state-of-the-art installation created 10 or 12 years ago. All the planning obstacles were overcome to provide an installation that would incinerate waste and provide electricity and provide heat to the houses with which it was surrounded. It was a remarkable planning achievement.
	The plant has worked very effectively. Waste has been disposed of and electricity has gone into the grid. But not one single house has received any warmth. There was no agreement between the site owners and the local authority on how that difficulty should be overcome and who would be responsible for plumbing the heat round the area. Unfortunately, there was no regulatory system to give any encouragement or inducement and there was no financial inducement to bring it about. That is a scandal. I was amused on speaking to someone at lunch today. He lived close to the site of the old Battersea power station and his apartment was still plumbed to receive heat. Unfortunately, there is no longer a power station there to provide it.
	I turn to a different scandal in which we all, in a sense, share the blame. The noble Lord, Lord Methuen, has remarked on my recent Written Question to the noble Lord, Lord Sainsbury, and the Government about heat waste from power stations. I asked how much heat was dispersed to the atmosphere. It is worth reading out the reply:
	"For the UK as a whole, in 2003 electricity generators' fuel inputs . . . totalled 86.66 million tonnes of oil equivalent, which is . . . 1031.1 TWh".
	One terawatt hour equals one billion kilowatts, which means that we add nine zeroes to the positive digits. It continues:
	"For the same period, total generation . . . production less pumped storage . . . was 398.8 TWh. From this it may be inferred that 632.3 TWh [of energy] . . . was used in the generating process".—[Official Report, 20/6/05; col. WA 152.]
	Now there is a question of exactly how much of that was the generating process and how much was waste heat. My guess is that it all escaped as waste heat.
	What does that really mean? Who understands what a terawatt hour is? It means that when I switch a one kilowatt heater on to warm a room in my house, I pay for the electricity generating industry to use another one and a half kilowatt hours of power in order that I receive my one. When I think about that I find it very difficult to think that we are running an efficient system and, in the modern context, running an ethically sensible system.
	I have to accept that there is not much one can do about that. We are dealing with a history where all of the power stations have been put in the most remote parts of the country. Although heat can be moved about, it cannot be moved that far. Of course, there could be a response. The Government could say clearly that in all future planning matters, energy will be an overriding factor in planning decisions. In particular, that ought to be the case for electric generating plant. It gels with paragraph 3.22 of the committee's report, which states:
	"A further consideration, strictly speaking outside the scope of this Report, is the fact that CHP generators allow biomass, or for that matter any combustible fuel, to be used more efficiently, producing overall energy efficiency of around 80 per cent, rather than the efficiency of generating electricity alone, which is typically between 30 and 40 per cent".
	The fact is that when things need to change, the greatest obstacle is past practice and, more importantly, past investment. I have to accept that there is not much that can be done in a hurry about these matters. But something has to be done. I have to say to the noble Lord, Lord Haworth, who expressed concern about the highlands, that I have considerable doubts about the benefit of generating electricity in the outer isles to supply London, as it would involve huge transmission costs and losses. We must radically review our approach to electricity generation.
	I have an aspiration different from the Government's target of a 60 per cent reduction in 1990s carbon emission levels by 2050. My aspiration is that there should be zero mineral hydrocarbons by 2050. I know that I will not live to see it, but it should be our target if we are to behave responsibly and get global warming under control. Anything less will not achieve that goal.

Lord Moynihan: My Lords, as a former Minister of Energy in two Conservative governments, with the honour of being the first chairman of the Government's Renewable Energy Advisory Group, I worked with a strong team of officials to launch the first major policy by a British Government to support the development of renewable energy technology; namely, the non-fossil fuel obligation.
	As to declaring my interests, I am a patron of the British Wind Energy Association and a director of Clipper Windpower plc—a company which, for the record, has neither developed wind farms in the UK nor sold turbines into the UK market. I am also a director of the Rowan Drilling Group of Companies.
	I am a long-standing supporter of government policies geared to support renewable energy and a lifelong believer in the importance of cleaner energy sources, from the expansion of natural gas in contrast to oil and coal-fired power generation to the development of policies to promote low-cost renewable energy technology. I am also a proponent of new build nuclear plants once the issues of cost, decommissioning and safe waste disposal are satisfactorily resolved.
	However, let us be under no illusion. New build nuclear will at best come on stream between five and 10 years from now and new build nuclear is irrelevant to the immediate contribution renewable energy can make to our supply base. The debate between nuclear and renewable is, as the noble Lord, Lord Whitty, stated redundant in the context of our 2010 energy goals. We will, however, need both in the long-term future energy supply base.
	The current supply base also demands attention. It will become increasingly over-exposed, as the noble Baroness, Lady Sharp, stated, to imported natural gas, an interconnector which can and does flow in both directions; to a European meteorological pattern which, on the whole, has bitterly cold spells on either side of the Channel simultaneously; and to an historic paucity of political priority given to the Norwegian dimension of our energy needs. With no gas storage of any significance and a desperately tight market, we can only pray that the next two winters, before significant new build LNG is landed at high cost into the UK, will be bereft of prolonged cold spells which will lead to brown outs. Such is the underestimated severity of the energy crisis we face. The immediate outlook is bleak, serious and demands high-level government preparation today.
	The report from the Science and Technology Committee which is being debated today is essential reading for all who share my concern that it is incumbent on government to recognise the vital importance of renewable energy to ensure security of energy supplies through diversity of supply. I congratulate the noble Lord, Lord Oxburgh, and his committee on their work—for their clarity, precision and the academic rigour of their report.
	The political dimension under consideration is clear and international in scope. International agreement is needed for coherent regulatory and policy frameworks to support market development, including removing barriers, the concept of internalising external costs for all energy sources and allowing fair competition. Governments must also tackle subsidies to conventional energy sources that are distorting many existing energy markets.
	Let me attempt to focus on a number of issues raised in the context of wind energy, rightly recognised by your Lordships as one of the principal technologies capable of providing a solution to our national renewable energy obligations—not above 10 per cent, not in low wind-speed countries such as Germany, not with 20 per cent, 22.5 per cent, 25 per cent load factors, but here in the United Kingdom. Through public awareness programmes and education, we need to dispel myths which for too long have taken their place at the high table of misinformation.
	One such issue which touches the morning paper nerve as I read the national press, is the much publicised question of the causes of bird fatalities. In 2002, Erickson et al wrote a study in the United States entitled Summary of anthropogenic causes of bird mortality. Out of every 10,000 premature bird fatalities, more than 5,500 die as a direct cause of the built environment—buildings and windows. Some 800 deaths are attributable to high-tension power lines, 700 to vehicles and less than one in 10,000 to wind turbines. More than 1,000 are due to the activities of the domestic cat. As strong a proponent as I am of bird life, it may be a little unwise of me to return home tonight and suggest to my children a policy advocating the removal of the family cat.
	While the onshore wind power market is expected to demonstrate substantial growth in the near term, my personal view is that the future for wind energy does not lie principally onshore. It is in the offshore market that the Government can and should take a global lead. It is offshore where consistent winds are found. It is offshore where the legitimate concerns of visual intrusion are minimised.
	The contribution of wind energy in the marine environment is far reaching. Just three 2.5 megawatt machines over a 30-year certified lifetime would generate sufficient electricity to substitute 1 million barrels of oil equivalent for power generation. Some 75 machines on the horizon would equate to a substantial oil discovery in the North Sea, with massive environmental savings.
	For me, what lies at the heart of the report is the joint recognition by the Government and the committee that continuing to reduce the costs of those technologies which are closest to market is of paramount importance. The challenge now, as it has been for 10 years, is technological and commercially driven. It is to drive down further the cost of energy; to design low wind-speed turbines which can operate commercially in lower wind-speed areas; to increase exponentially the geographical capture of the wind resource through a new generation of turbine.
	There are many who believe that scaling mechanical items in wind turbine design has reached design limits; that once you scale up from a 1.5 megawatt machine, the cost curve will increase. In recent years, there have been few technological breakthroughs in the industry. Companies have, not unwisely, followed the alternative route and scaled up to achieve improved margins and profitability. But to tackle the offshore challenge and build turbines in the 4.5 to 7 megawatt range and higher, the industry will need to address the all-pervasive challenge of low rpm and high torque putting extreme structural stress on the gearbox and bearings. Efficiency, reliability and durability will be the hallmarks of the next generation of machines capable of reducing the cost of energy. With two thirds of the projected growth of annual European wind power deployment predicted to come from offshore over the next five or more years, the Government's focus should be on continued co-operation with the industry—not just to marinise land-based turbines but to roll out a new generation of fit-for-purpose, low cost of energy marine wind turbines.
	The DTI's technology programme reaffirms the commitment to support businesses investing in new and emerging technologies. That is welcome. Offshore wind turbines appear to fit this programme well, but were, sadly, omitted as being a priority by the Technology Strategy Board, and I would welcome the Government revisiting this omission.
	It is my belief that the UK is best suited to lead the offshore wind technology challenge world wide. The Government start from a position of being genuinely committed to the challenge. The senior civil servants working for Joan MacNaughton number among the most respected in the sector world wide. Our R&D support is being strengthened. We have a legacy of proven expertise in the oil and gas supply and service sector, and of supporting a high UK content in offshore wind technology. When I was Minister for Energy in 1990, a typical onshore wind turbine would generate electricity at a cost in excess of 7p per kilowatt hour, assuming a 20-year life, 7.5 metres-per-second wind speed at hub height, and a 15 per cent required rate of return. Now the sector is capable of operating at 3.5p/kWh onshore. To see that sort of technological and commercial development, Exxon would indeed be proud.

Lord Sainsbury of Turville: My Lords, I thank the noble Baroness for making that point, because I want to cover a lot of issues.
	The Government welcome the Science and Technology Committee's report on the practicalities of meeting the Government's environmental and renewable targets. I thank all speakers in the debate, particularly the right reverend Prelate the Bishop of Liverpool and the noble Lord, Lord Oxburgh, for their constructive contributions on energy efficiency and renewable energy. The report rightly challenged us on some key issues of our energy policies and gave us a lot to think about.
	We could debate many issues this evening, but I thought it would be most useful to concentrate my remarks not on the overall issue—I think we agree on that—but on where the Government and the committee have different viewpoints. First, I shall deal with the question of energy crops, a point raised by the noble Baroness, Lady Miller of Hendon. The committee considered that the Government's projections for the contribution of energy crops were overoptimistic. We have asked the consultants to re-examine the numbers, and it is clear that the committee's report is right. We will write to the committee to set out the position as we now see it.
	Next I shall take the question of the generating costs. The committee called on the Government to commission independent and authoritative research to provide comprehensive costs for generating technologies. The Government have properly published a number of major studies of different generating technology costs. Inevitably, they change as a result of many factors, including developments. However, we will look at the evolving work on the issue and keep generating costs under review.
	A small but important point raised by the report was on tidal lagoons. The committee urged the Government to publish the report on tidal lagoons, to promote greater public debate on the advantages and disadvantages of such schemes. The Government are persuaded by the merits of the committee's argument. We will undertake to review the available information and, if we can get the permission of the people who compiled it and on whom it was gathered, we will look at publishing the report so that people can see it. However, I should make it clear that there is no question of reconsidering the scheme. The figures in the report were clear that it was a highly expensive scheme. We feel that it makes no sense to invest in technologies when the costs remain extremely high. It must be sensible to invest in technologies when they begin to make some commercial sense.
	The noble Lord, Lord Oxburgh, raised an important question on priorities and the security of supply. The committee's report raised concerns about security of the UK's electricity supplies, which is an issue that invokes strong opinions. Noble Lords will be aware that the maintenance of secure energy supplies is a fundamental goal of the Government's energy policy, as we made clear in the energy White Paper. The committee would like it to be the main goal of our energy policy, but we believe that we should not give priority to any one goal. We wish to achieve all four goals set out in the White Paper. Noble Lords will also recognise that my right honourable friend the Secretary of State for Trade and Industry and the independent regulator Ofgem have statutory responsibility for ensuring the security of our electricity supplies.
	I totally agree with the noble Lord, Lord Oxburgh, that the lights cannot be allowed to go out. However, I cannot agree with his rather frivolous comment that you could let baked beans go out of supply in stores. Some of us regard that as an equally serious issue.
	Capacity margin is a further question. Your Lordships have expressed the view that the Government should prescribe a level for the capacity margin, technically defined as the proportion by which available generating capacity exceeds expected peak demand. We are not convinced that anything would be gained by the Government doing so. We believe that the key issue here is the market framework which the Government and Ofgem have put in place to ensure that market participants have every commercial incentive to make that calculation and to get it right.
	Under market rules, if an electricity or indeed a gas supplier finds himself unable to put into the national distribution networks as much as his customers take out, he faces severe financial penalties. Consultation is also now under way on a proposal to make those penalties even more onerous. That is a strong lever to ensure that market participants make sure they are able to provide the supplies for which they have contracted.
	It is clear that renewable energy has an important role to play in reducing carbon dioxide emissions and the committee expressed concern about the ability of industry to deliver the Government's target of 10 per cent of electricity supplies from renewable sources of energy by 2010. But there is now enough evidence of investors coming forward to enable us to achieve our targets, provided the barriers to renewables—that is, grid supply, capacity, planning issues and the barriers of the MoD—can be addressed in time. As has already been mentioned in the debate, the DTI has created a dedicated 2010 target team which is responsible for ensuring that the key barriers can be addressed. I can however assure the noble Lord, Lord Haworth, that there is no question of steamrolling the opponents. That is not the way of the British Civil Service.
	Recent successes include acceptance by the MoD of the recommendations of the Eskdalemuir study, which should enable objections to more than 1 gigawatt of renewable projects to be lifted. In addition, as the Government highlighted in their response to the committee, the National Audit Office report looked at our plans and concluded that the Government might well achieve 9.9 per cent of electricity supply from renewable sources of energy by 2010. That is very close to the 10 per cent target which I believe is attainable if we can remove the barriers. Last year was a record year for wind generation, with 240 megawatts being built. We expect to double that in 2005 and to see a continuing trend upwards, which means it is very likely that we can meet the target.
	I am particularly pleased that in the debate the noble Lord, Lord Haworth, made what is to me one of the key points. That is simply that if we run down nuclear by 2020, we will have certainly gone back on CO2 emissions over the first 20 years of the programme. There is no way in which we can achieve more than 20 per cent renewables by 2020. If at the same time we lose 25 per cent of nuclear energy over the first 20 years of the programme, we will have gone back on CO2 emissions. That is not a satisfactory position. That is why we must be looking at other ways of improving our performance. Also, as the noble Lord, Lord Methuen, rightly pointed out, it would leave us dependent probably on imported gas for 70 per cent of our needs. That, too, must be seen as a vulnerability. The extent of that vulnerability is to be debated, but that there is a vulnerability is unarguable.
	Noble Lords will be aware that the Government's main mechanism for supporting industry's delivery of a 10 per cent target is the renewables obligation. While the committee had concerns that the obligation would act as a cap on renewables because of the potential cliff-edge on renewable obligation certificates, the Government have been addressing this issue in the context of the review of the obligation. We expect to publish the statutory consultation paper on the review of the 2005 renewables obligation in September in concluding our proposals on future levels of the obligation. The noble Lord, Lord Oxburgh, raised a new version of the scheme, which we will certainly consider.
	I shall briefly describe what the Government are doing on energy efficiency. The right reverend Prelate the Bishop of Liverpool will see that we are doing a great deal. He implied that we are doing very little but, in fact, we have a very substantial programme. The bill for supporting renewables will soon run at about £1 billion. That is a sign of the great commitment of the Government to renewables. Of course, research, which we are ramping up, is only one of the costs. We should also bear in mind the very substantial investment—the key investment—which is being put in by the private sector; Centrica plans, for example, to invest £750 million in renewables.
	We also recognise that increased energy efficiency must make an important contribution if we are to achieve our energy policy goals. The energy White Paper made it clear that energy efficiency is likely to be the cheapest and safest way of addressing all four of our energy policy objectives. The Energy Efficiency Action Plan, published in April 2004, estimated that annual carbon savings of 12 million tonnes could be made by 2010, and suggested that energy efficiency could contribute around half of the additional 15 million to 20 million tonnes of carbon savings likely to be needed by 2020. The action plan set out and described a challenging set of detailed policies and measures to improve energy efficiency to an unprecedented level across the economy.
	Through the EU Emissions Trading Scheme, climate change agreements, climate change levy, and other targeted tax allowances, including those for combined heat and power, our most energy intensive industries and the power generation sector have strong incentives to reduce their emissions in the most cost-effective way. We are working in partnership with business to deliver the 8 million tonnes of carbon savings by 2010 that were targeted from that sector.
	In the household sector, building regulations and the energy efficiency commitment are leading the way, as part of a broader package of polices, to improve residential energy efficiency. There has already been significant progress: for example, improvements in the housing stock between 1997 and 2001 have resulted in annual carbon savings of 1.7 million tonnes. In 2002, through the building regulations, we raised the minimum standard for the energy performance of new buildings by 25 per cent. By the end of this year, we aim to raise the standard again with the introduction of a further revision to the building regulations and the implementation of the EU energy performance of buildings directive.
	We have not been idle since publishing the Energy Efficiency Action Plan. It has been reinforced by further measures and commitments, including ongoing work to encourage innovation in building design and construction through a code for sustainable buildings, which, from April 2006, will be a requirement on all new homes funded by government or their agencies, including through relevant public/private partnerships; an additional £10 million for the community energy programme, which is helping to overcome the barriers to and encouraging the uptake of community heating schemes across the UK; an additional £10 million to the Energy Saving Trust to support the development of its new sustainable energy network, which will provide advice and promote the take-up of sustainable and efficient use of energy in the home; increased funding to the Carbon Trust to ramp up their work with business on delivering a low-carbon economy; a £12 million climate change communication initiative to change public attitudes to climate change; and a £20 million fund to support technological innovation in energy efficiency.
	I now turn to a number of specific points raised by noble Lords during the debate. The noble Lord, Lord Oxburgh, raised the issue of bioethanol and my noble friend Lord Whitty mentioned the transport dimension. The Department for Transport is taking forward work on a biofuels strategy to deliver carbon savings in the transport sector. Among the options being considered is a road transport fuel obligation which could promote the use of biodiesel and bioethanol for transport.
	The noble Earl, Lord Selborne, raised the difficulties of biomass. I remind noble Lords again that Sir Ben Gill is leading the Biomass Task Force which, in its one-year study, will seek to stimulate biomass supply and demand in a bid to help to meet renewable energy targets and to boost farming, forestry and the rural economy. The task force is expected to submit a final report to the Government in the autumn. If there is anyone who is suitable to take on all the bureaucratic rules that inevitably surround these schemes, it is Sir Ben Gill, who has the right experience to do that.
	The noble Baroness, Lady Sharp, asked whether with wind power we are putting all our eggs in one basket. The answer is that, at the moment, it is the one source of renewable energy that makes commercial sense to invest in. At this point, we should be putting most of our efforts on renewables into wind power. As far as research is concerned, there are a number of other technologies in which we ought to invest in demonstrators and research. However, to put money into them at a stage when, in many cases, they are way out of court as far as commercial considerations are concerned would be an obvious mistake.
	The noble Lords, Lord Jenkin and Lord Chorley, raised the question of the intermittency of wind power. We accept that intermittency must be managed, but surplus capacity has to be maintained because of plant failure. That applies to all technologies. As the noble Lord said, the 2010 target can be met with limited changes to the operation of the grid. In the longer term, the geographical dispersal of wind farms, shifts to more farms offshore where there is greater wind. The development of storage techniques and demand management should help to deal with the problem.
	The noble Lord, Lord Whitty, raised the question of the machinery of government. This issue always comes up. I think that we should not keep changing the structure of government and should make certain that the processes work.
	The noble Lord, Lord Cameron of Dillington, raised the issue of energy from waste. The Government recognise the benefits of energy derived from waste. Indeed, it is an issue covered by the review of the renewables obligation.
	The noble Lord, Lord Winston, made the point that we need the participation of the public. I think that there is not quite as much growing distrust of technology as he implied. There is a growing understanding that many of our environmental problems will be solved only by science, technology and innovation. But I entirely agree with him that we need to bring the public into this debate. We have a series of schemes under the Sciencewise project, which is developing public participation. We will make certain that the public will be able to particulate fully in the energy debate in the next couple of years.
	Despite what the noble Lord, Lord Tombs, said, I do not think that we are showing a lack of leadership on this subject. As the right reverend Prelate the Bishop of Liverpool made clear, this is a major issue. It is not a quixotic gesture to put extra funds into this area. We need to look at all sources of energy, including nuclear, on the basis of what they can contribute to our three goals, and not take any of them believing that it can solve the whole problem.
	The noble Lord, Lord Moynihan, raised some important questions. I think that he is wrong to feel that there is a crisis and that we might run out of energy. As one can see from this debate, it is not a question of running out of energy. If we do not go ahead on nuclear, or if we do not reach our targets on renewables, we will see what we are seeing at the moment. The generators will go on building on the basis of energy from coal and gas, and we will see, as we saw in 2003, emissions go up because of the way that the generators solve the problem.
	Finally, I thank noble Lords for an interesting debate on the future of the UK's energy policy, and particularly on energy efficiency and renewable sources of energy. The report by the Science and Technology Select Committee and the debate today have provided much food for thought. I know that my honourable friend the Minister with responsibility for energy will reflect long and hard on the views expressed by your Lordships.

The Lord Bishop of Liverpool: had given notice of his intention to call attention to the Government's strategy and timetable for programmes of energy efficiency, use reduction and conservation and for the implementation of renewable sources of energy; and to move for Papers.
	Motion not moved.
	House adjourned at twenty-eight minutes past six o'clock.
	Correction
	The question attributed to the Lord Corbett of Castle Vale in col. 1642 of yesterday's Hansard, was in fact asked by the Lord Campbell-Savours.